3.06_FI106 Part B Review Question Preview (ID: 61005)


Part B Review. TEACHERS: click here for quick copy question ID numbers.

How is a budget like a tree?
a) A budget is supported by strong sales like a tree is supported by strong roots.
b) A budget requires care and nurturing, like a young tree.
c) A budget changes from season to season.
d) A budget is divided into categories and subcategories similar to tree branches.

In most cases, a budget’s largest income category is
a) interest.
b) tax.
c) sales.
d) profit.

After a business designates categories of expense in its budget, it
a) applies a formula.
b) appoints an accountant.
c) allocates a dollar amount.
d) attaches a time limit.

In business, budgets are prepared for a specific time period, usually a
a) fiscal year.
b) calendar year.
c) quarter at a time.
d) month at a time.

Which of the following is an advantage of a rolling budget:
a) It requires less effort than an annual budget.
b) It allows you to have a year-long budget in place at all times.
c) It sets an annual budget that does not change.
d) It has to be consulted less frequently by managers.

A master budget is made up of information from
a) the previous year’s budget, with a 10% increase.
b) internal sales forecasts and the probable level of competition.
c) specialized budgets that are handed down from top management.
d) specialized budgets that are generated by individual departments.

A quality of all specialized budgets is that they are
a) interrelated.
b) created independently.
c) driven by projected inventory.
d) unrelated.

The format of a particular budget report
a) is standardized and does not change.
b) can change to meet a manager’s needs.
c) is flexible and unimportant.
d) is unique to each department and manager.

Which of the following often prepare budgets in business:
a) All employees
b) Inventory clerks
c) Sales cashiers
d) Middle managers

Why is it important for a business’s budget to be well planned?
a) Time is valuable.
b) Money is limited.
c) Pricing is complex.
d) Credit is expensive.

To develop realistic budgets, existing businesses usually base their estimates on
a) industry data.
b) governmental information.
c) past performance.
d) competitors’ activities.

Which of the following is a factor that might cause a business to adjust its budget figures:
a) Sales procedures
b) Local elections
c) Operating policies
d) Economic trends

To make sure their budgets are effective, what should businesses do with budget infor-mation?
a) Send it to all stockholders
b) Provide it to all top managers
c) Post it on bulletin boards
d) Communicate it to all employees

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