Question COMPLETION STATEMENTS

COMPLETION STATEMENTS

196. A _________________ is a formal written statement of management’s plans expressed in financial terms.

197. A budget is a primary means of ________________ agreed upon objectives throughout the business organization.

198. Effective budgeting is dependent on an _________________________ in which authority and responsibility are clearly defined.

199. The budget should have the support of _________________ and should be an important basis for _________________________ by comparing actual results to expected results.

200. Many companies use ____________________________ budgets by dropping the month just ending and adding a future month.

201. A __________________ is responsible for coordinating the preparation of the budget in many companies.

202. A major difference between the annual budget and long-range planning is the ____________________ over which the data pertain.

203. The ____________________ is the starting point in preparing the master budget.

204. The formula for developing a production budget is ___________________ plus ______________________ minus _______________________.

205. The ________________ is a set of interrelated budgets that constitutes a plan of action for a specified period of time.

206. Three major sections of a cash budget are (1) ___________________, (2) ____________________, and (3) ______________________.

207. The two major differences between the master budgets of a merchandiser and a manufacturer are that the merchandiser will have a ______________________ budget and will not have __________________ budgets.

MATCHING

208. Match the items below by entering the appropriate code letter in the space provided.

A. Budget F. Production budget

B. Financial budgets G. Cash budget

C. Budget committee H. Long-range planning

D. Master budget I. Direct materials budget

E. Sales forecast J. Sales budget

____ 1. A selection of strategies to achieve long-term goals.

____ 2. An estimate of expected sales for the budget period.

____ 3. Budgets that indicate the cash resources needed for expected operations and planned capital expenditures.

____ 4. The projection of potential sales for the industry and the company’s expected share of such sales.

____ 5. Management’s plans expressed in financial terms for a specified future time period.

____ 6. A projection of anticipated cash flows.

Matching 208 (Cont.)

____ 7. A group responsible for coordinating the preparation of the budget.

____ 8. A projection of production requirements to meet expected sales.

____ 9. A set of interrelated budgets that constitute a plan of action for a specified time period.

____ 10. An estimate of the quantity and cost of direct materials to be purchased.

SHORT-ANSWER ESSAY QUESTIONS

S-A E 209

(a) What is a budget?

(b) How does a budget contribute to good management?

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