Chapter 6: Planning, the Balanced Scorecard, and BudgetingAprilJanuaryJanuaryFebruaryChapter 6: Planning, the Balanced Scorecard, and BudgetingChapter 6Planning, the Balanced Scorecard, and BudgetingMATCHING1. Match the following terms with the descriptions below.A. Administrative budgetB. Direct labor and manufacturing overhead budgetC. Direct materials purchases budgetD. Marketing and distribution budgetE. Master budgetF. Production budgetG. Sales budget_____ 1. This budget plans for the firm's advertising and shipping expenditures._____ 2. A budget that shows the expected sales for the period in both physical and financial amounts._____ 3. A budget contains the cost of the accounting and financing functions of the firm. _____ 4. A budget that reflects the expected cost of the conversion process._____ 5. A budget that reflects the expected cost of the materials used in the production of the product._____ 6. The compilation of all the budgets prepared in planning the revenue, expenditure, and conversion process._____ 7. A budget that plans the company's desired ending inventory and units to be produced in the coming time period. Answer: 1.D; 2.G; 3.A; 4.B; 5.C; 6.E; 7.F 2. Match the following terms with the descriptions below.A. Budgetary SlackB. BudgetingC. Ideal StandardD. Incremental budgetingE. Mandated budgetingF. Normal standardG. Participatory budgetingH. Zero-based budgetingAinsworth/Deines, Introduction to Accounting: An Integrated Approach, 4/e98Chapter 6: Planning, the Balanced Scorecard, and Budgeting_____ 1. The process of expressing the company's goals and objective in quantitative terms._____ 2. A standard that can be achieved only if operating conditions are almost perfect._____ 3. A difference between reported budget numbers and realistic budget numbers_____ 4. A budgeting strategy in which the company considers each budget period a fresh start._____ 5. A standard that can be achieved under practical operating conditions._____ 6. A budget set by upper-level management; a top down approach._____ 7. Individual who are affected by the budget get input into the process; a bottom-up approach._____ 8. Budgeting using last year's budget as a starting point for this year's budget. Answer: 1.B; 2.C; 3.A; 4. H; 5.F; 6.E; 7.G; 8.D 3. Match the following processes with the budgets or schedules listed below.A. Revenue process planningB. Conversion process planningC. Expenditure process planning_____ 1. Production Budget_____ 2. Sales Budget_____ 3. Cash Disbursements Schedule_____ 4. Marketing and Distribution Budget_____ 5. Accounts Receivable Schedule_____ 6. Direct Labor and Overhead Budget_____ 7. Direct Materials Purchases Budget_____ 8. Cash Receipts Budget_____ 9. Accounts Payable Schedule_____ 10. Administrative Budget Answer: 1.B; 2.A; 3.C; 4.A; 5.A; 6.C; 7.C; 8.A; 9.C; 10.C MULTIPLE CHOICE4. A plan for the future expressed in quantitative terms is called a: A) cycle B) budget C) commentary D) mathematical model Answer: B Difficulty: Easy Ainsworth/Deines, Introduction to Accounting: An Integrated Approach, 4/e99Chapter 6: Planning, the Balanced Scorecard, and Budgeting5. Which of the following does not affect the cost of preparing a budget? A) Time and resource requirement B) The budgeting activities of competitors C) Adaptability of departments D) Motivation and behavior of individuals Answer: B Difficulty: Medium 6. Budgetary slack is created when: A) When the difference between actual and budgeted amounts are accidental B) When the difference between actual and budgeted amounts are based on unforeseen events. C) When the difference between actual and budgeted amounts are the result of deliberately introduced bias in the budgetary process. D) When the difference between actual and budgeted amounts are the result of management's inability to be clairvoyant. Answer: C Difficulty: Medium 7. The balanced scorecard approach is successful in reducing budgetary slack because: A) It uses several different measures to assess how successful a department performed. B) It uses actual results rather than estimated budgeted figures to measure performance. C) It uses only those measures that balance the budgeted figures with the actual figures. D) It uses those measures that make the assets balance with the liabilities and owners' equity. Answer: A Difficulty: Hard 8. The strategy whereby a company uses the current period's budget as a starting point in preparing next period's budget is referred to as: A) mandated budgeting B) zero-based budgeting C) incremental budgeting D) participative budgeting Answer: C Difficulty: Easy 9. Ideal standards used in the budgeting process - A) Do not factor in operating inefficiencies in the budgeting process B) Allows for small deviations from perfection C) Is based on ideal working conditions but will permit some slack in operations D) Requires that deviations between actual and budgeted results be minimized. Answer: A Difficulty: Easy Ainsworth/Deines, Introduction to Accounting: An Integrated Approach, 4/e100Chapter 6: Planning, the Balanced Scorecard, and Budgeting10. A budgeting system that allows individuals who are affected by the budget to have input into the budgeting process is called: A) mandated budgeting B) zero-based budgeting C) incremental budgeting D) participative budgeting Answer: D Difficulty: Easy 11. A budget based on prior year's budget as a starting point is a: A) Zero-based budget B) Prior year budget C) Incremental budget D) Mandatory budget Answer: C Difficulty: Easy 12. An advantage of a participatory budget is: A) Management can disregard their employee's input if necessary. B) Employees get a percentage of the budgetary slack introduced into the budget. C) Participatory budgets are typically more accurate than other types of budgets. D) Employees provide a wealth of information to management and are motivated by the process. Answer: D Difficulty: Medium 13. The question of how many units of product to manufacture would be considered when preparing the: A) master budget B) project budget C) strategic budget D) operating budget Answer: D Difficulty: Medium 14. The final step in a master budget is the preparation of the: A) cash budget B) sales budget C) pro forma financial statements D) selling and administrative costs budget Answer: A Difficulty: Easy Ainsworth/Deines,