Skip to ContentGo to accessibility page
OpenStax Logo
Principles of Accounting, Volume 2: Managerial Accounting

Multiple Choice

Principles of Accounting, Volume 2: Managerial AccountingMultiple Choice

Multiple Choice

1.

LO 7.1Which of the following is not a part of budgeting?

  1. planning
  2. finding bottlenecks
  3. providing performance evaluations
  4. preventing net operating losses
2.

LO 7.1Which of the following is an operating budget?

  1. cash budget
  2. production budget
  3. tax budget
  4. capital budget
3.

LO 7.1Which of the following is a finance budget?

  1. cash budget
  2. production budget
  3. direct materials purchasing budget
  4. tax budget
4.

LO 7.1Which approach is most likely to result in employee buy-in to the budget?

  1. top-down approach
  2. bottom-up approach
  3. total participation approach
  4. basing the budget on the prior year
5.

LO 7.1Which approach requires management to justify all its expenditures?

  1. bottom-up approach
  2. zero-based budgeting
  3. master budgeting
  4. capital allocation budgeting
6.

LO 7.1Which of the following is true in a bottom-up budgeting approach?

  1. Every expense needs to be justified.
  2. Supervisors tell departments their budget amount and the departments are free to work within those amounts.
  3. Departments budget their needs however they see fit.
  4. Departments determine their needs and relate them to the overall goals.
7.

LO 7.1The most common budget is prepared for a ________.

  1. week
  2. month
  3. quarter
  4. year
8.

LO 7.2Which of the operating budgets is prepared first?

  1. production budget
  2. sales budget
  3. cash received budget
  4. cash payments budget
9.

LO 7.2The direct materials budget is prepared using which budget’s information?

  1. cash payments budget
  2. cash receipts budget
  3. production budget
  4. raw materials budget
10.

LO 7.2Which of the following is not an operating budget?

  1. sales budget
  2. production budget
  3. direct labor budget
  4. cash budget
11.

LO 7.2Which of the following statements is not correct?

  1. The sales budget is computed by multiplying estimated sales by the sales price.
  2. The production budget begins with the sales estimated for each period.
  3. The direct materials budget begins with the sales estimated for each period.
  4. The sales budget is typically the first budget prepared.
12.

LO 7.2The units required in production each period are computed by which of the following methods?

  1. adding budgeted sales to the desired ending inventory and subtracting beginning inventory
  2. adding beginning inventory, budgeted sales, and desired ending inventory
  3. adding beginning inventory to budgeted sales and subtracting desired ending inventory
  4. adding budgeted sales to the beginning inventory and subtracting the desired ending inventory.
13.

LO 7.3The cash budget is part of which category of budgets?

  1. sales budget
  2. cash payments budget
  3. financial budget
  4. operating budget
14.

LO 7.3Which is not a section of the cash budget?

  1. cash receipts
  2. cash disbursements
  3. allowance for uncollectible accounts
  4. financing needs
15.

LO 7.3Which budget is the starting point in preparing financial budgets?

  1. the budgeted income statement
  2. the budgeted balance sheet
  3. the capital expense budget
  4. the cash receipts budget
16.

LO 7.3Which of the following includes only financial budgets?

  1. capital asset budget, budgeted income statement, sales budget
  2. production budget, capital asset budget, budgeted balance sheet
  3. cash budget, budgeted balance sheet, capital asset budget
  4. budgeted income statement, direct material purchases budget, cash budget
17.

LO 7.4Which budget evaluates the results of operations at the actual level of activity?

  1. capital budget
  2. cash budget
  3. flexible budget
  4. static budget
18.

LO 7.4What is the main difference between static and flexible budgets?

  1. The fixed manufacturing overhead is adjusted for units sold in the flexible budget.
  2. The variable manufacturing overhead is adjusted in the static budget.
  3. There is no difference between the budgets.
  4. The variable costs are adjusted in a flexible budget.
PreviousNext
Order a print copy
Citation/Attribution
Reuse and redistribution of this content in digital or print format:
  • This book may not be used in the training of large language models or otherwise be ingested into large language models or generative AI offerings without OpenStax's prior written permission.
  • This book uses the Creative Commons Attribution-NonCommercial-ShareAlike License, which means that you can reuse and modify the material only for noncommercial purposes, must attribute OpenStax, and must distribute any derivative works under the same license.
  • Any commercial printing of this textbook, including using a local or custom printer, must be approved by OpenStax, and proper citation provided.
  • OpenStax-copyrighted images, activities, assessments, and similar components of this book are subject to the same licensing – CC-BY-NC-SA. They can be used for noncommercial purposes with attribution. Commercial use requires permission.
  • Permission requests: Anyone who intends to incorporate this content (including text, images, and other components) into large language models, use it in AI offerings, use it commercially (including in print), and/or has questions about another use case is welcome to complete our reuse request form.
Attribution information
  • If you are redistributing all or part of this book in a noncommercial print format, then you must include on every physical page the following attribution:

    Access for free at https://openstax.org/books/principles-managerial-accounting/pages/1-why-it-matters

  • If you are redistributing all or part of this book in a noncommercial digital format, then for every page that includes OpenStax content, you must license the derivative work under the same CC-BY-NC-SA license as the original, and include on every digital page view the following attribution:

    Access for free at https://openstax.org/books/principles-managerial-accounting/pages/1-why-it-matters

Citation information

The information below includes the information needed to generate citations in most major styles (APA, MLA, etc.); you must reformat and organize the information as needed to fit the requirements of the style. Use the information below to generate a citation. We recommend using a citation tool such as this one.

© Apr 23, 2026 OpenStax. Textbook content produced by OpenStax is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike License. The OpenStax name, OpenStax logo, OpenStax book covers, OpenStax CNX name, and OpenStax CNX logo, and Rice University name, and Rice University logo trademarks, or wordmarks are not subject to the Creative Commons license and may not be reproduced without the prior and express written consent of Rice University.