Reference no: EM132379676

Answer the following questions

QUESTION 1 : From the following data calculate the estimated cash received from credit sales for December. Credit sales for October, $10000; November, $15000; December, $14000 Credit sales are normally settled in the pattern, 70% in the month of sale, 20% in the month following the sale, and the balance in the second month following the sale.

$14000$
11400$
13800$
10000$
12200

QUESTION 2 : An interrelated set of budgets for a future period is known as:

a flexed budget
a program budget
an assembly of budgets
a master budget
there is no term used for a set of budgets

QUESTION 3 : The outlay that does NOT appear in the cash budget is:

payment for prepaid interest.
payment of cash dividends.
money borrowed from a moneylender.
an instalment paid for the lease of equipment.
None of the above, i.e. all are included in a cash budget

QUESTION 4 : The key variable which is normally the starting point for the budget process and upon which many other items are based is:

working hours of employees.
sales.
factory capacity.
production.
owner's equity.

QUESTION 5 : Creditors accounts are settled 35% in the month of purchase and 65% in the month following the purchase. If credit purchases are $20,000 in January and $26,000 in February how much cash is paid to creditors in February?

$20,000
$46,000
$23,900
$26,000
$22,100

QUESTION 6 : Which of these shows an unfavourable variance?

Budgeted receipts for dividends received $10000, actual dividends received $10200
Budgeted payment for salaries $20000, actual salaries $19000
Actual receipt for sales $120000, budgeted sales $112000
Actual supplies purchased $750, budgeted supplies $880
None of the above result in an unfavourable variance

QUESTION 7 : Which of these is not a strategy to improve cash inflow?

Offer incentives to debtors for prompt payments
Sell off unnecessary non-current assets
Increase expenditure on non-current assets
Increase sales
All are strategies to improve cash inflow

QUESTION 8 : From the following data calculate the estimated cash received from credit sales for October. Credit sales for August, $10000; September, $12000; October, $15000

Credit sales are normally settled in the pattern, 60% in the month of sale and 40% in the month following the sale.

$15000
$27000
$9000
$7800
$13800

QUESTION 9 : An unfavourable variance occurs when:

actual costs are higher than budgeted costs
budgeted costs are lower than actual costs
actual sales are lower than budgeted sales
All options are correct

QUESTION 10 : Which statement is not correct?
A favourable variance occurs when actual revenues are larger than budgeted revenues.
A favourable variance occurs when actual expenses are smaller than budgeted expenses.
An unfavourable variance occurs when budgeted revenues are smaller than actual revenues.
An unfavourable variance occurs when budgeted expenses are smaller than actual expenses.
None of the above, i.e. all are correct statements

QUESTION 11 : Which of these is not a commonly prepared budget?

Cash budget
Purchases budget
Depreciation budget
Capital budget
All are commonly prepared budgets

QUESTION 12 : Which of the following items would NOT be included in a cash budget?
Cash dividends paid to shareholders
Depreciation on motor vehicles
Purchase of non-current asset for cash
Cash sales

QUESTION 13 : A master budget is best described as:

a budget for a manufacturing business.
the one and only budget that is of interest to management.
a summary of a number of interrelated budgets.
a budget of the cash flows predicted for a future period of time.

QUESTION 14 : Xon Company is planning to purchase construction machinery at a cost of $200,000. The planned delivery date is 1st February 2014. A deposit of $10,000 is to be paid on 1 November, 2013. The amount that will appear in the cash budget for November 2013 is:

$190,000 outflow.
$10,000 inflow.
$200,000 outflow.
$10,000 outflow.

QUESTION 15 : Sales in December were $960,000. Projected sales for the first quarter of 2009 are:

January $1,080,000

February $1,200,000

March $1,280,000

Sales are 20% cash and 80% on credit. Debtors pay in the month following the sale.

Calculate the total cash sales for the three months, January, February and March.

$2,848,000
$256,000
$960,000
$712,000
QUESTION 16 : If the opening balance of cash for one month is $20,000, cash receipts are estimated to be $389,000 and cash payments are estimated as $300,000 the opening cash balance at the beginning of the next month is:

$69,000
$109,000
$89,000
cannot be calculated

QUESTION 17 : The main way in which budgets provide a means of control in an organisation is by allowing:

management to control the budget targets.
budget targets to be set at maximum performance.
senior management to control lower level managers.
actual performance to be compared to budget targets.

QUESTION 18 : A common feature of most cash budgets is:

the budget period is broken into months.
a columnar format.
a section for non-cash expenses such as doubtful debts and depreciation.
A and B

QUESTION 19 : In business it is desirable to build up cash balances as high as possible to cope with any emergency.

True
False

QUESTION 20 : The master budget is commonly classified into two sections, the operating budgets and the financial budgets.

True
False