Question

At what amount will the inventory and cost of goods sold amounts be reported on the financial statements?

Inventory at actual and cost of goods sold at standard.

Inventory at standard and cost of goods sold at standard.

Inventory at standard and cost of goods sold at actual.

Inventory at actual and cost of goods sold at actual.

Which of the following is a disadvantage of participative budgeting?

It is a time-consuming process.

Managers may pad the budget.

Both it is a time-consuming process and managers may pad the budget.

Neither that it is a time-consuming process nor that managers may pad the budget.

Overhead is typically divided into which of the following components?

Product and period

Controllable and non-controllable

Direct and indirect

Fixed and variable

Which of the following is a use of the materials purchases budget?

It helps managers minimize the resources invested in inventory.

It helps managers plan the quantity and timing of purchases of material.

It helps ensure the adequate level of inventory.

All of these answer choices are correct.

Which of the following is one of the major reasons that small businesses fail?

Inadequate earnings per share

Inadequate cash flow

Inadequate net income

Inadequate assets

Answer 1

1. Both inventory and cost of good sold will be reported at ACTUAL in the financial statements .

Thus option 4 : Inventory at actual and cost of goods sold at actual is correct.

2. Disadvantage of participative budgeting is both time consuming process and managers may pad the budget.

It is said that managers may pad the process because experienced managers may attempt to introduce budgetary slack, which involves deliberately reducing the revenues estimates and increasing the expenses estimates so that there can be a favorable variance and it would be easy to show that the targets are achieved.

3. Overheads are typically divided into fixed and variable overheads .

Because all other options are division of cost that is  period and product cost , controllable and non- controllable cost and direct and indirect cost .

4.Uses of material  purchases budgets are :

ALL OF THESE ANSWER CHOICES ARE CORRECT .

Because ; It helps the manager o minimize the resources invested in inventory.

It helps the manager plan the quantity and timing of purchase of material.

It helps ensure the adequate level of inventory.

5. One of the main reason for small business failure is

INADEQUATE CASH FLOW .

According to a research it is said that 29% of small business fail because they run out of cash.