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Budgeting and Financial Management

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Questions and Answers

What is the primary responsibility of the chief executive of a firm regarding budget administration?

Delegating the budget responsibility
Administering the budget (correct)
Approving the budget
Preparing the budget

What type of budget is used for significant investments in projects with long-term implications?

Master budget
Capital budget (correct)
Financial budget
Operating budget

Who is responsible for justifying changes made to the previous budget?

Managers (correct)
Chief executive
Controller
Budget committee

What is the purpose of an operating budget?

To project revenues, expenses, and results of operations (C) Signup and view all the answers

Who may the chief executive delegate the budget responsibility to?

Any of the above (D) Signup and view all the answers

What is a financial budget related to?

Budget of financial resources reflected in the budgeted balance sheet (D) Signup and view all the answers

What is the book value of Property, Plant and Equipment (PPE) as of December 31?

2,800,000.00 (B) Signup and view all the answers

What is the total amount of unpaid accounts payable as of December 31?

349,602.0 (D) Signup and view all the answers

What is the net income for the period ending June 30?

307,650.00 (A) Signup and view all the answers

What is the main purpose of a budget?

To control and plan financial activities (C) Signup and view all the answers

Who is responsible for preparing and administering budgets?

Managers (D) Signup and view all the answers

What is the master budget?

A summary of all budgets (D) Signup and view all the answers

What is the primary function of a budgeting schedule?

To answer who, what, and when questions (B) Signup and view all the answers

What is the purpose of a responsibility accounting system?

To identify cost drivers and activity centers (B) Signup and view all the answers

What is the main benefit of financial modeling?

It allows for the evaluation of alternative scenarios (B) Signup and view all the answers

What is the primary goal of participatory budgeting?

To involve every manager in planning and control (D) Signup and view all the answers

What is a potential conflict that may arise in a budget system?

Between planning and control (B) Signup and view all the answers

What is the purpose of tying performance to compensation?

To motivate managers to achieve their unit's budget goals (C) Signup and view all the answers

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