Budgetary Planning

Play an AI-generated podcast conversation about this lesson

What is the primary focus of financial budgets?

Establishing goals for sales and production personnel

Forecasting sales revenue for the budget period

Preparing the budgeted income statement

Determining the cash resources needed to fund expected operations and planned capital expenditures (correct)

What is the result of inadequate inventories?

Excessive inventories in the next quarter

Layoffs in a subsequent quarter

Added costs for overtime work or lost sales (correct)

Cutbacks in production in a subsequent quarter

Which budget is prepared first and depends on the sales forecast?

Direct Labor Budget

Direct Materials Budget

Sales Budget (correct)

Production Budget

What is the formula to calculate the required direct materials units to be purchased?

Direct materials units required for production + desired ending direct materials units - beginning direct materials units Signup and view all the answers

What is the primary purpose of the production budget?

To show the number of units of a product to produce to meet anticipated sales demand Signup and view all the answers

What is the consequence of an inaccurate sales budget?

Adverse effect on net income Signup and view all the answers

What type of expenses are included in a company's cash budget?

Direct materials, direct labor, manufacturing overhead, and selling and administrative expenses Signup and view all the answers

What is the purpose of the financing section in a cash budget?

To show expected borrowings and repayment of borrowed funds Signup and view all the answers

When is a cash budget particularly useful for a company?

When there is a cash deficiency or the cash balance is below management's minimum required balance Signup and view all the answers

What is the formula for calculating required merchandise purchases?

Budgeted cost of goods sold + desired ending merchandise inventory - beginning merchandise inventory Signup and view all the answers

What is the budgeted balance sheet used for?

To project the financial position of the company at the end of the budget period Signup and view all the answers

Which type of companies also use budgeting?

Merchandisers, Service companies, and not-for-profit organizations Signup and view all the answers

What is the main component of a budgeted income statement?

Sales budget and selling and administrative expense budget Signup and view all the answers

What is the primary purpose of a budget committee?

To coordinate the preparation of the budget Signup and view all the answers

What is a budget, according to the definition?

A formal written statement of management’s plans Signup and view all the answers

What is the starting point for budgeting in not-for-profit organizations?

Expenditures Signup and view all the answers

How many sections does a cash budget have?

3 Signup and view all the answers

In which type of companies is budgeting a critical factor in coordinating staff needs with anticipated services?

Service companies Signup and view all the answers

What is the term for a manager's intentional underestimation of budgeted revenues or overestimation of budgeted expenses to make it easier to achieve budgetary goals?

Budgetary slack Signup and view all the answers

Which type of budget is used to estimate the quantity and cost of direct labor necessary to meet production requirements?

Direct labor budget Signup and view all the answers

What is the term for a set of interrelated budgets that constitutes a plan of action for a specific time period?

Master budget Signup and view all the answers

What is the term for a projection of financial position at the end of the budget period?

Budgeted balance sheet Signup and view all the answers

What is the primary focus of financial budgets?

Cash resources needed to fund operations Signup and view all the answers

What is the term for a formalized process of identifying long-term goals, selecting strategies, and developing policies and plans to achieve those goals?

Long-range planning Signup and view all the answers

What is one of the benefits of budgeting?

It creates an early warning system for potential problems Signup and view all the answers

What is the primary purpose of a budget?

To express management's plans in financial terms Signup and view all the answers

What is essential for a successful organization?

Making both long-term and short-term plans Signup and view all the answers

What does a budget help to do?

Increase management awareness of the entity’s overall operations Signup and view all the answers

What is the role of a budget in an organization?

To aid management Signup and view all the answers

What does a budget facilitate?

Coordination of activities within the business Signup and view all the answers

Budgetary Planning

Podcast Beta

Questions and Answers

What is the primary focus of financial budgets?

What is the result of inadequate inventories?

Which budget is prepared first and depends on the sales forecast?

What is the formula to calculate the required direct materials units to be purchased?

What is the primary purpose of the production budget?

What is the consequence of an inaccurate sales budget?

What type of expenses are included in a company's cash budget?

What is the purpose of the financing section in a cash budget?

When is a cash budget particularly useful for a company?

What is the formula for calculating required merchandise purchases?

What is the budgeted balance sheet used for?

Which type of companies also use budgeting?

What is the main component of a budgeted income statement?

What is the primary purpose of a budget committee?

What is a budget, according to the definition?

What is the starting point for budgeting in not-for-profit organizations?

How many sections does a cash budget have?

In which type of companies is budgeting a critical factor in coordinating staff needs with anticipated services?

What is the term for a manager's intentional underestimation of budgeted revenues or overestimation of budgeted expenses to make it easier to achieve budgetary goals?

Which type of budget is used to estimate the quantity and cost of direct labor necessary to meet production requirements?

What is the term for a set of interrelated budgets that constitutes a plan of action for a specific time period?

What is the term for a projection of financial position at the end of the budget period?

What is the primary focus of financial budgets?

What is the term for a formalized process of identifying long-term goals, selecting strategies, and developing policies and plans to achieve those goals?

What is one of the benefits of budgeting?

What is the primary purpose of a budget?

What is essential for a successful organization?

What does a budget help to do?

What is the role of a budget in an organization?

What does a budget facilitate?

More Quizzes Like This

Budgeting and Financial Management

Budgeting Process

Budgeting Basics

Management Accounting Overview

Upgrade to continue