Question : 21. Which of the following not a benefit of budgeting? A. Sets realistic : 1208265

21. Which of the following is not a benefit of budgeting? 
A. Sets realistic standards that serve as benchmarks for evaluating performance
B. Coordinates the activities of the company by integrating the plans of all departments
C. Requires managers to plan ahead and to formalize their objectives
D. Provides assurance that accounting records are in accordance with generally accepted accounting principles

22. One of the tasks that managers at Greensboro Company have to complete during the budgeting process is to develop a contingency plan for their organization in case a downturn occurs in their business. This budgeting requirement is an example of: 
A. Budget coordination.
B. Performance measurement.
C. Planning.
D. Taking corrective action.

23. When Northern Company district managers submitted their preliminary budget proposals, top management discovered that the southern district manager had requested a new project management information system. Unfortunately, the system is incompatible with the system used at headquarters. Which of the following advantages of budgeting reduces the likelihood that the company will end up with two incompatible systems? 
A. Planning
B. Corrective action
C. Performance measurement
D. Coordination

24. One company’s practice is to provide bonuses to salespeople who exceed their sales targets. Which of the following advantages of budgeting enabled the company to establish its recognition program? 
A. Performance measurement
B. Coordination
C. Planning
D. Corrective action

25. Trina had been operating her machine for an entire month before she realized that it was generating more scrap than usual. Which advantage of budgeting would have helped her identify this problem sooner? 
A. Planning
B. Corrective action
C. Performance measurement
D. Coordination

26. Which of the following would represent the order in which most master budgets are prepared? 
A. Sales, Purchases, Cash, Income Statement
B. Purchases, Cash, Sales, Income Statement
C. Purchases, Sales, Cash, Income Statement
D. Sales, Income Statement, Cash, Purchases

27. Which of the following budgets would be prepared by a manufacturing company but not a merchandising company? 
A. Selling and administrative expense budget
B. Cost of goods sold budget
C. Raw materials budget
D. Sales budget

28. Which of the following budgets needs to be prepared prior to preparing a purchases budget? 
A. Selling and administrative expense budget
B. Cash budget
C. Sales budget
D. All of the other answers are correct.

29. Select the incorrect statement. 
A. Four purposes often claimed for budgeting involve planning, coordination, performance measurement, and corrective action.
B. In a participative budgeting system, budget information flows in one direction only, from bottom to top.
C. The three major categories of the master budget are operating budgets, capital budgets, and pro forma financial statements.
D. The accounting department normally does not coordinate the effort to establish the sales forecast.

30. Select the incorrect statement about budgeting and human behavior. 
A. People are often uncomfortable with budgets.
B. Budgets are constraining.
C. Budgets limit individual freedom in favor of an established plan.
D. Participative budgeting contributes to fear and resentment.