Test Bank For Accounting Information for Business Decisions 2nd Edition by Billie Cunningham

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