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LO 7.1What is a budget and what are the different types of budgets?


LO 7.1What is the difference between budgeting and long-range planning?


LO 7.1What are the advantages and disadvantages of the bottom-up budgeting approach?


LO 7.1Why might a rolling budget require more management participation than an annual budget?


LO 7.2What information is necessary for the operating budgets?


LO 7.2What operating budget exists for manufacturing but not for a retail company?


LO 7.3What is the process for developing a budgeted balance sheet?


LO 7.3Which of the financial budgets is the most important? Why?


LO 7.4A company has prepared the operating budget and the cash budget. It is now preparing the budgeted balance sheet. Identify the document that contains each of these balances.

  1. cash
  2. accounts receivable
  3. finished goods inventory
  4. accounts payable
  5. equipment purchases

LO 7.4Fill in the blanks: A flexible budget summarizes _______ and _______ for various volume levels by adjusting the _______ costs for the various levels of activities. The _______ costs remain the same for all levels of activities.


LO 7.4What information is included in the capital asset budget?


LO 7.5Why does budget planning typically begin with the sales forecast?


LO 7.5What steps should be considered if a budget is to be set and later have its results evaluated?

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