Multiple choice questions on budgetary control system.

1. The cash budget is usually prepared before the production budget.

a)    True

b)    False

2. One of the weaknesses of budgets is that they are of little value in uncovering potential bottlenecks in an organization.

a)    True

b)    False

3. The number of units to be produced in a period can be determined by adding the expected sales to the desired ending inventory and then deducting the beginning inventory.

a)    True

b)    False

4. On a cash budget, the total amount of budgeted cash payments for manufacturing overhead should not include any amounts for depreciation on factory equipment.

a)    True

b)    False

5. A company has two divisions, each selling several product lines. If segment reports are prepared at the product line, the division managers\' salaries would be considered as common fixed costs of the product lines.

a)    True

b)    False

6. Return on investment (ROI) encourages managers to accept all investment decisions that will benefit the company as a whole when it is used as a measure of performance.

a)    True

b)    False

7. Responsibility accounting functions most effectively in decentralized organizations.

a)    True

b)    False

8. All profit centers are responsibility centers, but not all responsibility centers are profit centers.

a)    True

b)    False