Accounting For Decision Making And Control

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Multiple Choice Questions 1 Because people prepare budgets, budget figures are often biased. Which . is true? A. Sales quantity forecasts tend to be exaggerated to make the sales team look good B. Production cost estimates tend to be overstated to create wriggle room (budgetary slack) C. Efficient organizations begin their budget process with last year’s budget, and adjust the figures by a c D. When senior management sets budget numbers, a more realistic budget can be developed E. None of the above Below are various statements about different budgeting techniques. Which is false? A. Budget ratcheting tightens targets when performance fails to meet the target by a predetermined perce B. Budget lapsing prevents managers from hoarding funds 2 . C. Master(static) budgets are prepared for a single level of activity D. Budget lapsing encourages managers to spend money regardless of cost or value E. None of the above Below are some budgeting techniques which are used rarely (or more often) by government agencies and corporations. Which is true? 3 . a. Encumbrance accounting Private sector Often Public sector Rarely b . Flexible budgeting Rarely Often c. Budget lapsing Often Rarely d Zero-based Rarely Often . budgeting None of the e above A. Option A

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