26. Which of the following statements is true of the budgeting process? (Points

Question

26. Which of the following statements is true of the budgeting process? (Points : 2) 0 If a company carefully plans for its future, there will be no need to make modifications during the budget period. 0 It is a continuous process that encourages communication. 0 It shows the actual performance of the business. O Managers and employees are motivated to accept the budget's goals because they enjoy having their work monitored and evaluated. 27. The cash budget and the budgeted financial statements are collectively known as the (Points :2) D operating budget O master budget financial budgetw production budget 28. Which of the following best describes a standard? (Points :2) D A sales price, cost, or quantity that is expected under normal conditions Costs incurred to produce a product Budgeted amount for total product cost Actual sales price, cost, or quantity

Explanation / Answer

Answer 26:

B.It is a continuous process that encourages communication.

Reason: Budgeting process is a roadmap for preparation of budget. This process involves all those persons in the preparation of budget who are going to achieve the set goals. It means it clearly communicates what results are expected to be achieved and in which manner. Also, this is not a onetime work; rather this process is continuous task so as to check from time to time what updating is required. So, it connects all departments and people by clearly communicating and defining objectives and results.

Answer 27:

C. Financial budget

Reason: Financial budget is a blueprint of long-term and short-term expected incomes and anticipated expenses of business. It includes a cash budget, detailed budgeted balance sheet, cash flow budget and budgeted income statement.

Answer 28:

A. A sales price, cost, or quantity that is expected under normal conditions.

Reason: Standard is a benchmark set for various performance parameters like sales, cost, and quantity and prices etc, which a business firm expects to achieve in normal business conditions. Also, it gives a basis of comparison for actual performance.

Answer 32:

A. Payback

Reason: Payback period is the time required to recover the invested cost in an investment. This method ignores the time value of money and simply count years to recover the invested amount. While all the other methods like internal rate of return and net present value considers time value of money. Return on asset is not a capital budgeting technique.

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