Sales Forecasting and Participative Budgeting

Sales forecasting involves a consideration of only five factors.

The 'top-down' approach is referred to as participative budgeting.

A budget is a long-range plan.

The master budget is a single budget document.

Budgetary slack occurs when managers intentionally overestimate budgeted revenues.

The cash budget is prepared before the other budgets are prepared.

The master budget contains only one class of budgets.

The selling and administrative expense budget projects only fixed expenses for the budget period.

The cash receipts section of the cash budget includes expected cash payments.

The budgeted income statement is the first step in the budgeting process.

Total variable costs + Total fixed costs = Total selling and administrative expenses.

The cash budget is used to evaluate company performance.

Not-for-profit organizations budget on the basis of revenue and expense.

The primary benefits of budgeting include requiring management to plan ahead and motivating personnel to meet planned objectives.

The starting point in the budgeting process for not-for-profit entities is usually receipts.

Acceptance by top-level management is the only necessary component of effective budgeting.

Budgeting is only necessary for profit-oriented businesses.

The master budget is comprised of a single budget that covers all aspects of the organization.

A merchandiser uses a production budget to determine the quantity of goods to be produced.

A service company can obtain budget data for service revenue from expected input or expected output.

If a service company is understaffed, it may gain revenue because of the increased demand for services.

In a service company, the critical factor in budgeting is determining the number of clients.

A merchandiser's master budget is identical to a manufacturer's master budget.

If a service company is overstaffed, labor costs are lower and profits are higher.

The budgeted income statement is prepared from the production budget and the cash budget.

A capital expenditure budget is a type of master budget that is only applicable to manufacturing companies.

The budget committee is responsible for implementing the budget.

The cash budget has four sections.

A budget is an informal statement of management’s plans.

Budgeting is only used in manufacturing companies.