Budgeting
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CPA Auditing and Attestation (AUD) › Budgeting
A budget that accommodates many levels of production volume is a:
Sales budget
Flexible budget
Zero based budget
Cash budget
Explanation
A flexible budget allows for many levels of production volume.
Which of the following statements about flexible budgets is true? They are:
budgets used to evaluate capacity utilization
designed to accommodate changes in the inflation rate
similar to static budgets but are adjusted for inflation
designed to accommodate changes in the activity level
Explanation
A flexible budget would be chosen when a manager expects changes in activity level of production.
The most direct way to prepare a cash budget for a manufacturing firm is to include:
Projected sales and purchases, percentage of collections, and terms of payments
Projected net income, depreciation, and goodwill amortization
Projected purchases, percentages of purchases paid, and net income
Projected sales, credit terms, and net income
Explanation
The simplest cash budget would include the components of cash collections and cash disbursements.
A plan that is created using budgeted revenue and costs but is based on the actual units of output is known as a:
Master budget
Static budget
Continuous budget
Flexible budget
Explanation
A flexible budget uses budgeted revenue and costs per unit, but it is adjusted based on actual units of output.
All of the following are considered operating/financial budgets, except the:
Cash budget
Capital budget
Production budget
Sales budget
Explanation
Capital budgets plan for the purchase of capital assets which only affect the operating budget through their subsequent effect on expense via depreciation.
An annual budget would be classified as which type of plan?
None of the answer choices are correct.
Operational
Multi-use
Single-use
Explanation
Annual budgets are single-use tactical plans. This means they are relatively short-term in nature and cover periods of up to 18 months.