18.

The budget method that maintains a constant twelve month planning horizon by adding a new month
on the end as the current month is completed is called:
A) an operating budget.
B) a capital budget.
C) a continuous budget.
D) a master budget.
Level: Easy LO: 1 Ans: C

19. In preparing a master budget, top management is generally best able to:
A) prepare detailed departmental-level budget figures.
B) provide a perspective on the company as a whole.
C) point out the particular persons who are to blame for inability to meet budget goals.
D) responses a, b, and c are all correct.
Level: Easy LO: 1 Ans: B

20. Which of the following benefits could an organization reasonably expect from an effective budget
program?

A) A Above
B) B Above
C) C Above
D) D Above
Level: Easy LO: 1 Ans: A

21. Which of the following is an advantage of implementing a self-imposed budgeting system?

A) Budgeting is quick and easy because only a few individuals are involved in the budgeting process.
B) Upper level management does not have to review budget estimates.
C) Motivation to meet budget estimates is usually enhanced.
D) All of the above.
Level: Easy LO: 1 Ans: C
22. All the following are considered to be benefits of participative budgeting, except for:
A) Individuals at all organizational levels are recognized as being part of a team; this results in greater
support for the organization.
B) The budget estimates are prepared by those in directly involved in activities.
C) When managers set their own targets for the budget, top management need not be concerned with the
overall profitability of operations.
D) Managers are held responsible for reaching their goals and cannot easily shift responsibility by
blaming unrealistic goals set by others.
Source: CMA, adapted
Level: Easy LO: 1 Ans: C

23. Which of the following is NOT an objective of the budgeting process?

A) To communicate management’s plans throughout the entire organization.
B) To provide a means of allocating resources to those parts of the organization where they can be used
most effectively.
C) To ensure that the company continues to grow.
D) To uncover potential bottlenecks before they occur.
Level: Easy LO: 1 Ans: C