Budgets serve to formalize the planning process but ordinarily should not serve as a basis for performance evaluation.

true   Incorrect or    falseCorrect

 

In large organizations a benefit of the budgeting process is to assist in communication and coordination of company plans and objectives.

true   Correct or    falseIncorrect

 

Which budget approach rarely involves lower-level personnel during the budget construction process?

top-down approach   Correct or    bottom-up approachIncorrect

 

The bottom-up budgeting process is a dictatorial approach which is generally met with resentment and a who cares attitude.

true   Incorrect or    falseCorrect

 

The bottom-up budgeting approach can be described as:

participative    Correct or    imposedIncorrect

 

Another term for budgetary slack is:

budgetary estimation   Incorrect or    paddingCorrect

 

Slack may permeate the entire budgetary process and sometimes tends to perpetuate itself.

true   Correct or    falseIncorrect

 

The budget process may consist of several rounds with changes and refinements being added along the way.

correct   Correct or    incorrectIncorrect

 

Capital expenditure budgets may cover a long-term horizon of as much as five to ten years.

true    Correct or    falseIncorrect

 

For purposes of control and evaluation, operating budgets should not be subdivided into quarters or months.

true    Incorrect or    falseCorrect

 

Budgeting is an effective tool to reduce costs and eliminate the need for active day-to-day management.

true    Incorrect or    falseCorrect

 

Perhaps the most significant limitation of budgeting is the:

amount of preparation required    Incorrect or   human relations and administration issuesCorrect

 

A budget process which results in the preparation of a comprehensive set of integrated budgets that serve as a financial plan for the entire organization is a:

master budget   Correct or   continuous budgetIncorrect

 

Which of the following types of budgets serve as the beginning of the entire budgetary process?

sales budget   Correct or    cash budgetIncorrect

 

The direct material purchases budget probably depends most significantly on the:

production budget    Correct or    sales budgetIncorrect

 

Because fixed factory overhead costs tend to be the same no matter the volume, they should not be included in the total factory overhead budget.

true    Incorrect or   falseCorrect

 

Which type of budgets offer the advantage of forcing management to continually think about the future?

stabilized budgets    Incorrect or    continuous budgetsCorrectIncorrect