Sample Final Exam

1. The term planning involves a. the development of future objectives and the preparation of various budgets to achieve these objectives. b. the steps taken to ensure that objectives set down by management are attained. c. the steps taken to ensure that all parts of the organization function in a manner consistent with organizational policies. d. comparing budgeted and actual results and taking steps to remedy unacceptable variations.

2. Self-imposed budgets typically are a. not subject to review by higher levels of management since to do so would contradict the participative aspect of the budgeting processing. b. not subject to review by higher levels of management except in specific cases where the input of higher management is required. c. subject to review by higher levels of management in order to prevent such self-imposed budgets from becoming too loose and allowing too much freedom in activities. d. not critical to the success of a budgeting program.

3. Which of the following statements is not correct? a. The sales budget is the starting point in preparing the master budget. b. The sales budget is constructed by multiplying the expected sales in units by the sales price. c. The sales budget generally is accompanied by a computation of expected cash receipts for the forthcoming budget period. d. The cash budget must be prepared prior to the sales budget since managers want to know the expected cash collections on sales made to customers in prior periods before