CPA Business Environment and Concepts (BEC) : Budgeting
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Example Questions
Example Question #1 : Budgeting
A budget that accommodates many levels of production volume is a:
Flexible budget
Sales budget
Cash budget
Zero based budget
Flexible budget
A flexible budget allows for many levels of production volume.
Example Question #2 : Budgeting
Which of the following statements about flexible budgets is true? They are:
budgets used to evaluate capacity utilization
designed to accommodate changes in the activity level
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
A flexible budget would be chosen when a manager expects changes in activity level of production.
Example Question #2 : Budgeting
The most direct way to prepare a cash budget for a manufacturing firm is to include:
Projected purchases, percentages of purchases paid, and net income
Projected sales and purchases, percentage of collections, and terms of payments
Projected net income, depreciation, and goodwill amortization
Projected sales, credit terms, and net income
Projected sales and purchases, percentage of collections, and terms of payments
The simplest cash budget would include the components of cash collections and cash disbursements.
Example Question #4 : Budgeting
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
Continuous budget
Flexible budget
Static budget
Flexible budget
A flexible budget uses budgeted revenue and costs per unit, but it is adjusted based on actual units of output.
Example Question #5 : Budgeting
All of the following are considered operating/financial budgets, except the:
Cash budget
Sales budget
Capital budget
Production budget
Capital budget
Capital budgets plan for the purchase of capital assets which only affect the operating budget through their subsequent effect on expense via depreciation.
Example Question #1 : Budgeting
An annual budget would be classified as which type of plan?
Multi-use
None of the answer choices are correct.
Single-use
Operational
Single-use
Annual budgets are single-use tactical plans. This means they are relatively short-term in nature and cover periods of up to 18 months.
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