Chapter 15 Budgeting and Controlling Operations and Taxes Answer
Key
Multiple Choice Questions
1.
_____ is the process of ensuring that organizational goals are achieved.
2.
_____ are acceptable levels that are set in advance that is used to measure how well
employees meet expectations.
3.
Which of the following statements is a characteristic of an effective control system?
4.
A(n) _____ budget plans expenditures for obtaining, expanding, and replacing physical
facilities.
5.
A(n) _____ budget forecasts sales and allocates expenses for achieving them.
6.
What is the function of a cash flow budget?
7.
Which of the following statements is a characteristic of a cash flow budget?
8.
Which of the following budgets is planned first when preparing the operating budget?
9.
How is cash balance calculated at the end of a month?
10.
_____ control is the careful planning and control of all financial activities of a firm.
11.
A _____ is a formalized examination and/or review of a company’s financial records.
12.
In _____ auditing, an outside certified public accountant (CPA) verifies the records and
financial statements of a company—usually once a year.
13.
Which of the following statements is a characteristic of an internal audit?
14.
The _____ shows how easily a company can pay its short-term obligations.
15.
_____ is the percentage of net profit the owners’ equity earns, before taxes.
16.
The _____ is the ratio of current assets, less inventory, to current liabilities.
17.
_____ is the amount of current assets less current liabilities.
18.
Working capital indicates the ability a company has:
19.
Which of the following best describes a collection period ratio?
20.
Which of the following helps increase the assets or decrease the liabilities of a company?
21.
_____ are those paid without an intermediary to a taxing authority by the person or
business against which they are levied.
22.
Which of the following is an example of a tax or a fee paid to operate a business?
23.
A(n) _____ is an additional tax on certain items imposed by the federal government.
24.
A(n) _____ is a tax on the utilization, consumption, or storage of goods within a taxing
jurisdiction.
25.
A(n) _____ is a tax added to the gross amount of the sale for goods sold within the taxing
jurisdiction.
26.
Which of the following is true of S corporation shareholders?
27.
Which of the following constitutes taxable income?
28.
Which of the following is a method of computing inventory that small firms tend to use to
save taxes when prices rise?
29.
Which of the following statements is true of taxes on amounts withdrawn from a
business?
30.
Credit management involves:
31.
Visa and MasterCard are examples of one of the many choices available to use the
services referred to as _____.
32.
_____ is a payment system through which one can accept charge sales from startup with
an attachment to one’s android, to customer POS.
True / False Questions
33.
Planning is the process of assuring that organizational goals are achieved.
34.
Performance standards tell employees in advance what level of performance is expected
of them.
35.
Effective control systems should be generally acceptable to those involved with
implementing them.
36.
A budget is a summary statement of a firm’s current liabilities.
37.
A capital budget reflects a business’s plans for obtaining, replacing, and expanding its
physical facilities.
38.
A cash flow budget is a forecast of expected cash receipts and expected cash payments.
39.
The objective of an operating budget is to plan and control revenue and expenses to
obtain desired profits.
40.
A capital budget is the most basic plan to consider when preparing an operating budget.
41.
If a firm is making profits, it is impossible for that firm to fail financially.