ch23 answer key
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ch23 Key
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http://downloadslide.blogspot.com1 . TRUE
2 . TRUE
3 . TRUE
4 . TRUE
5 . FALSE
6 . TRUE
7 . FALSE
8 . TRUE
9 . TRUE
1 . FALSE
2 . FALSE
3 . FALSE
4 . TRUE
5 . FALSE
6 . FALSE
7 . TRUE
8 . FALSE
9 . FALSE
10. TRUE
11. TRUE
12. TRUE
13. FALSE
14. TRUE
15. FALSE
16. FALSE
17. FALSE
18. FALSE
19. FALSE
20. FALSE
21. TRUE
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http://downloadslide.blogspot.com22. TRUE
23. TRUE
24. TRUE
25. FALSE
26. FALSE
27. FALSE
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37. FALSE
38. C
39. A
40. E
41. D
42. E
43. E
44. A
45. D
46. D
47. C
48. B
49. D
50. E
51. C
52. A
53. C
54. A
55. E
56. B
57. D
58. B
59. D
60. A
61. A
62. A
63. B
64. B
65. E
66. D
67. D
68. C
69. C
70. C
71. C
72. D
73. B
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113. D
114. E
115. A
116. C
117. B
118. D
119. Merchandise purchases budget :: A plan that shows the units or costs of merchandise to be purchased by a
merchandising company during the budget period. and Budgeted balance sheet:: An accounting report that
presents predicted amounts of the company's assets, liabilities, and equity balances at the end of the budget
period. and Sales budget:: A plan showing the units of goods to be sold and the sales to be derived; the usual
starting point in the budgeting process. and Budgeted income statement :: An accounting report that presents
predicted amounts of the company's revenues and expenses for the budgeting period. and Safety stock :: A
quantity of inventory or materials over the minimum to reduce the risk
of running short. and Master budget:: A comprehensive business plan that includes specific plans for expected
sales, the units of product to be produced, the merchandise or materials to be purchased, the expenses to be
incurred, the long-term assets to be purchased, and the amounts of cash to be borrowed or loans to be repaid, as
well as a budgeted income statement and balance sheet. and Budget :: A formal statement of a company's future
plans, usually expressed in monetary terms. and General and administrative expense budget :: A plan that
shows predicted operating expenses not included in the selling expenses budget. and Cash budget :: A plan that
shows the expected cash inflows and cash outflows during the budget period, including receipts from any loans
needed to maintain a minimum cash balance and repayments of such loans.
120. Selling expense budget :: A plan that lists the types and amounts of selling expenses expected during the
budget period. and Manufacturing budget :: plan that shows the predicted costs for direct materials, direct labor,
and overhead costs to be incurred in manufacturing the units in the production budget. and Budgeted balance
sheet :: An accounting report that presents predicted amounts of the company's assets, liabilities, and equity as
of the end of the budget period. and Budget :: A formal statement of future plans, usually expressed in
monetary terms. and Sales budget :: A plan showing the units of goods to be sold and the sales to be derived;
usually the starting point in the budgeting process. and Capital expenditure budget :: A plan that lists dollaramounts to be both received from disposing of plant assets and spent on purchasing additional plant assets to
carry out the budgeted business activities. and Continuous budgeting:: The practice of preparing budgets for a
selected number of several periods and revising those budgets as each period is completed. and Production
budget :: A plan showing the number of units to be produced each month. and Cash budget:: A plan that shows
the expected cash inflows and outflows during the budget period, including receipts from loans needed to
maintain a minimum cash balance and repayments of such loans. and Rolling budgets :: A new set of budgets
added to replace the ones that have lapsed as each budget period goes by.
(6) Budgeting serves as a means of communicating plans and instructions.
(5) Budgeting provides a means of coordinating business activities.
(4) Budgeting can be used as a motivator if applied correctly.
(3) Budgeting provides a basis for evaluating performance.
(2) Budgeting focuses management's attention on the future.
(1) Budgeting promotes good decision-making processes, including analysis and research.
121. Benefits of budgeting are:
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(3) Perform budget evaluations carefully and allow opportunities to explain any failures.
(2) The goals covered by the budget should be attainable.
122. (1) Employees affected by a budget should be involved in the budgeting process.
123. Each month, a company might revise its budgets to remove the month or quarter just passed, and adds new
monthly or quarterly budgets to replace those that have lapsed. Generally, at any point in time monthly orquarterly budgets are available for the next 12 months or four quarters. This is a rolling budget. Rolling budgets
cause management to continuously plan ahead.
124. Budgets are developed in a bottom-up process to ensure fullest input participation. Each department should
provide budget input. If changes are made, the originating department must either adjust its proposals or explain
why they are acceptable. Communication between the originating department and the budget committee should
continue to ensure both parties accept the budget as reasonable, attainable, and desirable. Control is administered
through a budget committee of department heads. The committee performs oversight and directs activities.
The master budget usually starts with predictions of sales. Using the sales projection, the remaining operations
budgets are prepared. Then, capital expenditures are budgeted. Using the information from the operations and
capital expenditures budgets, the financial budgets can then be prepared, including the cash budget, budgeted
income statement, and budgeted balance sheet.
125. The master budget is the comprehensive plan, expressed in monetary terms, for an entire organization for a
given period. It is prepared from individual budgets of the various segments of the organization.
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126. Activity-based budgeting is a budget system based on expected activities. Knowledge of expected activitiesand their activity levels for the budget period enables management to plan for resources required to carry out theiractivities. Traditional budgeting lists items by the use of items (such as salaries, supplies, etc.). Activity-basedbudgeting requires management to list activities performed and their costs.
127. The sales budget is normally prepared first because the other operating and financial budgets depend oninformation provided by this particular budget. The plans of most departments are related to, and dependon, sales units and dollars.
128. The sales budget shows planned sales units and the expected dollars from those sales. It is generally thestarting point in the budgeting process. The sales budget is based on a careful analysis of forecasted economic
and market conditions, business capacity, and proposed selling expenses such as advertising.
129. A merchandise purchases budget is used to determine the number of units of merchandise inventory andthe cost of merchandise inventory to be purchased. The amount to be purchased is equal to the budgeted endinginventory in units plus budgeted units to be sold less beginning inventory in units. The amount to be purchasedis multiplied times the purchase price per unit to determine the dollar amount to be purchased.
130. The capital expenditures budget lists the amounts to be both received from plant asset disposals and spentto purchase additional plant assets to carry out the budgeted business activities.
131. A cash budget shows expected cash inflows and outflows during the budget period. Management canprearrange loans to cover anticipated cash shortages before they are needed. The cash budget also helps avoida cash balance that is too large.
132. A production budget shows the number of units to be produced each month, based on budgeted sales,
budgeted ending inventory of finished goods, and expected beginning inventory of finished goods. In amanufacturing firm, it takes the place of the purchases budget that would be prepared by a merchandising firm.
133. A manufacturing budget shows the budgeted costs for direct materials, direct labor, and overhead. It isbased on the production volume determined from the production budget.
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134. Answers will vary
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135. Answers will vary
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136. Answers will vary
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* 30% of next month's sales
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(1) July's beginning inventory = 25% x 4,500 =
1,125 units Feedback:
138. Answers will vary
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Feedback:
141. Answers will vary
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142. Answers will vary
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143. Answers will vary
(10) $112,000 + $189,000 + $214,000 = $515,000
(9) 50% x 80% x $535,000 =
$214,000 (8) 45% x 80% x
$525,000 = $189,000 (7) $0
(6) 20% x $560,000 = $112,000
(5) $107,000 + $180,000 + $210,000 = $497,000
(4) $0
(3) 50% x 80% x $525,000 =
$210,000 (2) 45% x 80% x$500,000 = $180,000 (1) 20%
x $535,000 = $107,000
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144. Answers will vary
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** ($3,600 - $1,964) x 1% = $16
* $3,600 x 1% = $36
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146. Answers will vary
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March cash receipts:
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Sales in
dollars per
month: 148.
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149. Answers will vary
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150. Answers will vary
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Feedback:
151. Answers will vary
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Total payments = $859,600
For June purchases ($867,000 x 80%) =
$693,600 For May purchases ($830,000
x 20%) = $166,000 Cash payments for
purchases;
Total collected = $1,625,000
From June sales ($1,700,000 x 40%) =
680,000 From May sales ($1,600,000 x
50%) = 800,000 From April sales
($1,450,000 x 10%) = $145,000 Cash
receipts from sales:
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154. Answers will vary
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Accounts payable balance = $900,000 x 20% =
$180,000 Accumulated depreciation = $276,000
+ $24,000 = $300,000 Merchandise inventory
balance = $1,750,000 x 10% = $175,000 Accounts
receivable balance = $1,700,000 x 60% =
$1,020,000 Cash balance = $62,000 +
$1,660,000 - $1,580,000 = $142,000
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157. (Any two of the following five:); Promotes Analysis and Focus on the Future; A Basis forPerformance Evaluation; Motivation of Employees; Coordination of Business Activities;Communication Device
158. Budget Committee
159. Operating Budgets; Capital Expenditure Budgets, Financial Budgets
160. Rolling budget
161.Sales Budget; Cash Budget, Budgeted Income Statement, Budgeted Balance Sheet
162. Activity-based budgeting
163. Capital expenditures budget
164. Cash budget
165. Production budget
166. Manufacturing budget
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ch23 SummaryCategory # of Questions
AACSB: Analytic 76
AACSB: Communications 90
AICPA BB: Resource Management 166
AICPA FN: Measurement 164
AICPA FN: Risk Analysis 2
Blooms: Apply 63
Blooms: Remember 58
Blooms: Understand 45
Difficulty: Easy 58
Difficulty: Hard 63
Difficulty: Medium 45
Fundamental - Chapter 23 166
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Learning Objective: A1 Analyze expense planning using activity-based budgeting. 5
Learning Objective: C1 Describe the importance and benefits of budgeting and the process of budget
administration. 38
Learning Objective: C2 Describe a master budget and the process of preparing it. 18
Learning Objective: P1 Prepare each component of a master budget and link each to the budgeting process.
48
Learning Objective: P2 Link both operating and capital expenditures budgets to budgeted financial
statements. 46
Learning Objective: P3 Appendix 23APrepare production and manufacturing budgets. 20
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