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1. Identify the true statement regarding budgets: A. The most common length of time for a budget is 18 months. B. The budget development process for the coming year usually starts several weeks before the current year-end. C. Another term for the bottom-up budget development approach is "participative budgeting". D. The majority of small businesses (500 employees or less) do prepare annual budgets.
2. Master budgets: A. Contains two classes of budgets-operating and financial budgets. B. Is a set of interrelated individual budgets that constitute a plan of action for a specified time period. C. The term "budget" is actually a shorthand term for a company's "master budget. D. All of the above statements are true regarding master budgets.
3. Identify the item that would not appear on a cash budget: A. Income tax expense B. Depreciation expense C. Payments for material purchases D. Cash dividends
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. Identify the false statement regarding the production budget: A. A realistic estimate of ending inventory is essential in scheduling production requirements. B. Will show the number of units of a product to produce in order to meet anticipated sales. C. Is prepared before the Selling and Administrative Expense Budget. D. Is calculated by taking the Budgeted COGS + Desired Ending Finished Goods Units - Beginning Finished Goods Units.
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. A company reports the following information from its sales account and sales budget: Sales May June $852,000 47,000 Expected Sales: July August September 845,000 55,000 60,000 Cash sales are normally 30% of total sales and all credit sales are expected to be collected in the month following the date of sale. The total amount of cash expected to be received from customers in September is: A. $56,500 B. $60,000 C. $55,000 D. $58,500

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1) This is a true statement about budgets: (C) Another term for the bottom-up budget development approach is “participative budgeting”.

2) (D) All of the statements are true regarding Master Budget.

3) The item that wouldn't be included in a cash budget is (B) Depreciation expense

4) The production budget misrepresentation is that (D)  Is calculated by taking the Budgeted COGS + Desired Ending Finished Goods Units - Beginning Finished Goods Units.

5) The total amount of money that customers are anticipated to pay in cash in September is (B) $60,000

1) Here option (C) is correct because department managers are given a role in creating their own budgets, the bottom-up budget generation approach is also known as participative budgeting.

2) Here option (D) is correct because the aforementioned claims are all accurate. The operating budget and the finance budget both have lower-level budgets that are included in the master budget. The term "master budget," which refers to all lower-level budgets within an institution, is quite inclusive.

3) Here option (B) is correct because Depreciation expense because it doesn't require a financial investment.

4) Here option (D) is correct because Budgeted Sales Units - Opening Stock of Finished Goods + Closing Stock of Finished Goods equals the production budget.

5) Here option (B) is correct because The entire sales value received from the sales budget is used to calculate the anticipated cash collection. The percentage of sales that are anticipated to be collected in the current and next periods is estimated by management.

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