Chapter 9 Budgetary Planning Learning Objectives
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Questions and Answers

What is the primary purpose of a budget?

  • To communicate management's plans for the future (correct)
  • To increase historical accounting data
  • To evaluate previous performance
  • To control historical accounting data

    • Who is typically responsible for presenting management's budgeting goals in financial terms?

  • The shareholders
  • The employees
  • The customers
  • The accountants (correct)

    • What does budgeting help create within a business?

  • Increased historical data accuracy
  • A focus on current operations only
  • An early warning system for potential problems (correct)
  • A reduction in management awareness

    • Which of the following is an essential characteristic of effective budgeting?

    <p>Definite objectives for evaluating performance</p> Signup and view all the answers

    What does a cash budget primarily focus on?

    <p>Financial plans for a future time period</p> Signup and view all the answers

    In what way does budgeting promote efficiency?

    <p>By creating an early warning system for potential problems</p> Signup and view all the answers

    Which of the following is not a benefit of budgeting according to the text?

    <p>It enables disciplinary action to be taken at every level of responsibility.</p> Signup and view all the answers

    What is the most common budget period mentioned in the text?

    <p>One year</p> Signup and view all the answers

    What should budgets be based on?

    <p>Past performance and a sales forecast</p> Signup and view all the answers

    Which of the following is not listed as a factor considered in sales forecasting according to the text?

    <p>Anticipated employee turnover</p> Signup and view all the answers

    What is the main advantage of participative budgeting mentioned in the text?

    <p>It produces more accurate budget estimates</p> Signup and view all the answers

    What is essential for an effective budgeting process?

    <p>A sound organizational structure with clearly defined authority and responsibility</p> Signup and view all the answers

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