#1
Which of the following is NOT a component of the master budget?
Capital budget
ExplanationExcludes long-term investment plans.
#2
In budgeting, what does the acronym ZBB stand for?
Zero-Based Budgeting
ExplanationRequires justification of all expenses.
#3
Which of the following is NOT a common budgeting method?
Cost-based budgeting
ExplanationCost-based approach is not widely used in budgeting.
#4
What does ROI stand for in the context of performance evaluation?
Return on Investment
ExplanationMeasures profitability relative to investment.
#5
Which budgeting approach involves adjusting budgets based on changes in business conditions or performance targets?
Rolling Budgeting
ExplanationContinuous adaptation to changing circumstances.
#6
What is the purpose of a cash budget?
To manage cash inflows and outflows
ExplanationEnsures availability of cash for operational needs.
#7
What is the primary purpose of a flexible budget?
To evaluate performance
ExplanationAllows for comparison with actual results.
#8
Which of the following is NOT a method used in performance evaluation?
Cost of Goods Sold (COGS)
ExplanationCOGS is a component of financial statements, not a method of evaluation.
#9
What is a key characteristic of a decentralized organization structure?
Delegation of decision-making authority
ExplanationEmpowers lower-level managers in decision-making.
#10
Which performance evaluation method compares actual results to a standard or benchmark?
Variance analysis
ExplanationMeasures deviations from expected performance.
#11
What is the primary drawback of a static budget?
Inflexibility in adjusting to changes
ExplanationDoes not accommodate fluctuations in activity levels.
#12
Which of the following is a measure of a company's short-term liquidity?
Current Ratio
ExplanationIndicates ability to meet short-term obligations.
#13
Which budgeting approach incorporates multiple budgeting levels and adjusts budgets based on actual activity levels?
Flexible budgeting
ExplanationAdapts to changes in business conditions.
#14
Which of the following is NOT a characteristic of a well-designed performance measurement system?
Subjectivity
ExplanationRelies on objective measures for evaluation.
#15
What is the formula for calculating the payback period?
Initial Investment / Annual Cash Flows
ExplanationTime taken to recover initial investment.