Test Bank For Accounting Information for Business Decisions 2nd Edition by Billie Cunningham
Chapter 3 – Developing a Business Plan: Budgeting
COMPLETION
1.A ____________________ is a report that gives a financial description of one part of a business’ planned activities.
ANS: budget
PTS: 1 DIF: Easy TOP: Why budget?
2.Using budgeting to describe a business’ plans allows the entrepreneur to uncover potential ___________________before they occur.
ANS: problems
PTS: 1 DIF: Easy TOP: Why budget?
3.Under _________________________, the entrepreneur periodically compares the results of the business’ actual operating activities with the related budget amounts, and focuses on improving the activities that show significant differences between actual and budget.
ANS: management by exception
PTS: 1 DIF: Moderate TOP: Budgeting creates benchmarks
4.A retail business’ ____________________ is the average time it takes the business to use cash to buy goods for sale, to sell these goods and to collect cash from its customers.
ANS: operating cycle
PTS: 1 DIF: Moderate TOP: The operating cycle of a retail business
5.____________________ is goods purchased for sale to customers.
ANS: Inventory
PTS: 1 DIF: Easy TOP: The operating cycle of a retail business
6.When businesses charge their purchases, these are called ____________________ purchases.
ANS: credit
PTS: 1 DIF: Easy TOP: The operating cycle of a retail business
7.When a business charges their purchases it results in ____________________.
ANS: accounts payable
PTS: 1 DIF: Easy TOP: The operating cycle of a retail business
8.When a business’ customers charge their purchases it results in ____________________.
ANS: accounts receivable
PTS: 1 DIF: Easy TOP: The operating cycle of a retail business
9.A ____________________ is a set of interrelated reports showing the relationships among a business’ goals, activities to be performed, resources to be used and expected financial results.
ANS: master budget
PTS: 1 DIF: Moderate TOP: The budget as a framework for planning
10.By the nature of their operations, a service business’ master budget does not include a ____________________ budget.
ANS: purchases
PTS: 1 DIF: Moderate TOP: The budget as a framework for planning
11.The ____________________ shows the number of units of inventory that the business expects to sell each month, the related monthly sales revenue, and the monthly cash collections from sales.
ANS: sales budget
PTS: 1 DIF: Easy TOP: The retail business’ sales budget
12.If a business allows credit sales, its ____________________ from accounts receivable will lag behind its sales revenue.
ANS: cash collections
PTS: 1 DIF: Moderate TOP: The retail business’ sales budget
13.Some businesses sales occur evenly throughout the year, while other businesses experience ____________________ sales.
ANS: seasonal
PTS: 1 DIF: Easy TOP: The retail business’ sales budget
14.The ____________________ shows the purchases in units required each month to make the expected sales and to keep inventory at the desired level.
ANS: purchases budget
PTS: 1 DIF: Easy TOP: The retail business’ purchases budget
15.The ____________________ shows the expenses and related cash payments associated with planned selling activities.
ANS: selling expenses budget
PTS: 1 DIF: Easy TOP: The retail business’ selling expenses budget
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