Reference no: EM131723518

Q1) The beginning cash balance is $50,000. January cash collected from sales is $745,000 and January cash payments for all items (excluding interest) are $705,000.

The company also has a loan balance of $100,000 on January 1st with an annual interest rate of 12%. Interest is computed based on the beginning monthly balance and is paid on the last day of the month.

What is the company's ending cash balance for January?

Q2) A hardware store has budgeted sales of $46,000 for its power tools in August. Management wants to have $8,000 in power tool inventory at the end of August. Its beginning inventory is expected to be $5,000. What is the budgeted amount of merchandise purchases?

Q3) The budgeting process serves which of the following purpose(s)?

a. It helps motivate employees and helps to effectively communicate with them.

b. It communicates expectations.

c. It helps coordinate activities toward common goals.

d. It helps in evaluating results and management performance.

e. All of the above.

Q4) Which is the proper order of preparing budgets?

a. Sales budget, production or purchases budget, SG&A expense budget, capital expenditures budget.

b. Sales budget, SG&A expense budget, production or purchases budget, capital expenditures budget.

c. Production or purchases budget, sales budget, SG&A expense budget, capital expenditures budget.

d. Capital expenditures budget, sales budget, production or purchases budget, SG&A expense budget.

e. Sales budget, capital expenditures budget, SG&A expense budget, production or purchases budget.

Q5) Which of the following formulas best describes the merchandise purchases budgets?

a. Inventory to purchase = Budgeted ending inventory plus budgeted cost of sales plus budgeted beginning inventory.

b. Inventory to purchase = Budgeted beginning inventory plus budgeted cost of sales less budgeted ending inventory.

c. Inventory to purchase = Budgeted beginning inventory plus budgeted cost of sales plus budgeted ending inventory.

d. Inventory to purchase = Budgeted ending inventory plus budgeted cost of sales less budgeted beginning inventory.

Q6) Which of the following is true regarding the capital expenditures budget?

a. It lists dollar amounts to be both received from plant asset disposals and spent to purchase additional plant assets to carry out the budgeted business activities.

b. It is generally the last budget prepared.

c. It is not generally affected by long range plans.

d. All of the answers are correct.

e. It usually involves short-term time commitments and is usually small (in terms of dollar values) when compared to other budgets.

Q7) Which of the following statements is not true?

a. Merchandise budgets show budgeted units and dollar amounts.

b. Budgeted balance sheets are dependent upon budgeted income statements.

c. Budgeted income statements include depreciation expenses.

d. Sales budgets are prepared before the cash budgets.

e. Cash budgets include depreciation expenses.