Chapter 23
The total quality management approach to budgeting sets budgeted amounts at levels that can be achieved through reasonably efficient operations. * False
The typical starting point of a master budget would be to prepare a budgeted balance sheet. * False
In preparing a master budget, budgeted levels for production, manufacturing costs, and operating expenses normally are determined after preparing the sales forecast. * True
A company's operating cycle is the time between purchases of direct materials and conversion of these materials back into cash. * True
If the behavioral approach is employed to determine the levels at which budgeted amounts are set, then reasonable and achievable levels should be used. * True
The behavioral approach to budgeting has as its goal the complete elimination of inefficiency. * False
A master budget actually includes a number of related budgets. * True
A budget prepared using the total quality management approach is always achievable by departments within a company. * False
Flexible budgeting may be viewed as combining the concepts of budgeting with cost-volume-profit analysis. * True
If the total quality management approach is employed to determine the level at which budgeted amounts are set, then absolute efficiency is assumed. * True
A cash budget determines the maximum limit amount of money that can be spent during the period. * False
A master budget is a comprehensive financial plan setting forth the financial and operational goals of a business. * True
The preparation of a budgeted balance sheet requires consideration of the budgeted capital expenditures and budgeted net income. * True
Under the "total quality management" philosophy, budgeted amounts should be set at realistic and achievable levels rather than at levels representing absolute efficiency.