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____ 1. Budgeting is:
a. a decision-making process.
b. a tax-compliance process.
c. a stockholder-accountability process.
d. a management-accountability process.
____ 2. The master budget:
a. is a set of interrelated budgets.
b. is the same for all businesses, service or retail.
c. is not prepared until after the sales budget is complete.
d. includes the end of period financial statements.
____ 3. An operating cycle is:
a. An entire year.
b. The time it takes for a business to realise a profit.
c. The average time it takes for a business to buy inventory, sell it to customers and to collect cash from customers.
d. The average time before a business must reorder inventory.
____ 4. Which of the following items would not appear in a budget?
a. How many products the business plans to sell.
b. Projected sales.
c. Anticipated rent costs.
d. Actual sales.
____ 5. If cash is collected at the sale:
a. the operating cycle will be shorter than if sold on credit.
b. the operating cycle will be longer than if sold on credit.
c. the account receivable will be increased as a result of the sale.
d. the account payable will be decreased as a result of the sale.
____ 6. A variable selling expense is:
a. an expense that is directly proportional to sales.
b. an expense that is indirectly proportional to sales.
c. an expense that never changes.
d. All of the options given.
____ 7. All of the following are included in the selling expenses budget, except:
a. the cost of the inventory that is expected to be sold.
b. the salespersons’ salaries and commissions.
c. the cost of advertising.
d. the salespersons petrol costs.
____ 8. What is an example of a fixed expense?
a. Wages.
b. Cost of goods sold.
c. Rent.
d. Cost of electricity
____ 9. The procedure for developing the selling expenses budget for a retailer:
a. involves gathering comparable industry data.
b. involves waiting on the marketing department to complete the advertising program.
c. involves reviewing past selling expenses and adjusting them for current plans.
d. involves gathering both the variable and fixed general and administrative costs.
____ 10. When a business sells land, buildings or equipment, it is reported in the ____ section of the statement of cash flows.
a. financing
b. investing
c. operating
d. expense account
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