Budget And Planning MCQ Questions Answers

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Budget And Planning multiple choice questions List

1. The Willsey Merchandise Company has budgeted $40,000 in sales for the month of December. The company's cost of goods sold is 30% of sales. If the company has budgeted to purchase $18,000 in merchandise during December, then the budgeted change in inventory levels over the month of December is:

2. Which of the following is NOT true about the Master Budget?

3. Since the budget period normally coincides with the accounting period, budgets of less than one year or greater than one year are not normally prepared.

4. Most successful businesses generally prepare their budgets from 'the top down'. These budgets are tightly controlled by upper management.

5. The task of preparing the budget normally is the responsibility of one department, the controller's department or a department of one of the high-level managers.

6. The budgeting process can be used to promote a positive effect on employees' attitudes, but it can also yield a negative one.

7. The process of planning future business actions and expressing those plans in a formal manner, usually in monetary terms, is called budgeting.

8. Accounts payable represent a spontaneous form of financing for a firm.

9. To determine the amount of discretionary funds needed, you would subtract the expected increase in liabilities from the sum of the expected increases in retained earnings and assets.

10. The Stuff Antique Store has current sales of $12 million and predicts next year's sales will grow to $16 million. Current assets are $3 million and fixed assets are $4 million. The firm's net profit margin is 6 percent after taxes. Presently, Stuff has $800,000 in accounts payable, $1.1 million in long-term debt, and $5 million (including $2.5 million in retained earnings) in common equity. Next year, Stuff projects that current assets and liabilities will rise in direct proportion to the forecasted sales, and that fixed assets will rise by $600,000. The Stuff Antique Store plans to pay dividends of $400,000 to common shareholders. What are Stuff's total financing needs and discretionary financing needs for the upcoming year?

11. The first step involved in predicting financing needs is:

12. A firm is using the DFN model to forecast the additional capital that they need to raise because of a sales increase. Which of the following factors are likely to increase the DFN?

13. Which of the following work to automatically reduce the need for discretionary financing as sales increase?

14. At the sustainable rate of growth, the company does not need any additional assets to support the increased sales.

15. If there exist economies of scale in inventory investment, the percent of sales method is likely to overstate additional asset needs for a given increase in sales.

16. The presence of excess capacity increases the need for discretionary financing for any level of sales increase.

17. A firm’s sustainable rate of growth (g*) is determined by which of the following:

18. Which of the following would decrease the need for additional discretionary financing, everything else constant?

19. Which of the following would be classified as spontaneous liabilities?

20. A flexible budget differs from a fixed budget in that more than one set of input values for variables such as Sales are used.

21. Which of the following items would NOT be included in the cash budget?

22. Budgets perform the function of:

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What comes first planning or budgeting?

The solution is preparation. Prior to making a budget, it's crucial to set objectives and create a strategy for achieving them. Analyzing previous expenditure trends and predicting upcoming costs are included in this. A budget may be made to keep track of and manage finances after a strategy is in place. Quizack is a fantastic resource for you to use to practice the most important Budget and Planning MCQ questions.

What is budgeting and planning in business?

Planning and budgeting entail laying out a business's financial course. This includes establishing objectives and goals, estimating costs and income, and efficiently allocating resources. Businesses may boost their profitability and accomplish their goals more effectively by properly planning and budgeting. It is crucial to effective management and decision-making.

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Are budgeting and planning the same?

Even though there is a clear distinction between the two, many individuals mistakenly use these phrases interchangeably. Planning is establishing overarching goals and figuring out the procedures necessary to reach them, whereas budgeting entails developing a financial plan for both short- and long-term objectives.

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What is the relationship between planning and budgeting?

Planning and budgeting are integral parts of the financial management process. A budget serves as an organization's financial strategy by describing anticipated income and expenses. Then, throughout the real decision-making and resource allocation process, this budget serves as guidance. Future goals and strategies are determined through planning, which then serves as a basis for budget formation.

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What is final budget planning?

It is the process of setting a budget and sticking to it in order to achieve financial goals. This involves identifying expenses, creating a spending plan, and adjusting as necessary.

Planning a budget well may assist both people and organizations in maintaining their financial security and achieving their goals. To make sure that the budget appropriately represents the current situation and goals, it is crucial to review and update it on a regular basis.

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