FIN370 MULTIPLE Choice Questions - 30881

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6)Which of the following is NOT a basic function of a budget?

a.       Budgets compare historical costs of the firm with its current cost performance.

b.      Budgets allow for performance evaluation.

c.       Budgets indicate the need for future financing.

d.      Budgets provide the basis for corrective action when actual figures differ from the budgeted figures.

17) Purchases of plant and equipment can be determined from the:

a.       pro forma income statement.

b.      use of ratio analysis.

c.       current cash budget.

d.      previous period’s balance sheet

18) All of the following are found in the cash budget EXCEPT:

a.       cash disbursements.

b.      new financing needed.

c.       a net change in cash for the period.

d.      inventory.

19) Which of the following is a non-cash expense?

a.       Packaging costs

b.      Administrative salaries

c.       Depreciation expenses

d.      Interest expense

20) A plant can remain operating when sales are depressed:

a.       in an effort to cover at least some of the variable cost.

b.      unless variable costs are zero when production is zero.

c.       if the selling price per unit exceeds the variable cost per unit.

d.      to help the local economy.

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6)Which of the following is NOT a basic function of a budget?


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