1. 7.1 What is a budget and what are the different types of budgets?

2. 7.1 What is the difference between budgeting and long-range planning?

3. 7.1 What are the advantages and disadvantages of the bottom-up budgeting approach?386 Chapter 7 Budgeting

4. 7.1 Why might a rolling budget require more management participation than an annual budget?

5. 7.2 What information is necessary for the operating budgets?

6. 7.2 What operating budget exists for manufacturing but not for a retail company?

7. 7.3 What is the process for developing a budgeted balance sheet?

8. 7.3 Which of the financial budgets is the most important? Why?

9. 7.4 A company has prepared the operating budget and the cash budget. It is now preparing the
budgeted balance sheet. Identify the document that contains each of these balances.

A. cash
B. accounts receivable
C. finished goods inventory
D. accounts payable
E. equipment purchases

10. 7.4 Fill in the blanks: A flexible budget summarizes _______ and _______ for various volume levels by
adjusting the _______ costs for the various levels of activities. The _______ costs remain the same for all levels of
activities.

11. 7.4 What information is included in the capital asset budget?

12. 7.5 Why does budget planning typically begin with the sales forecast?

13. 7.5 What steps should be considered if a budget is to be set and later have its results evaluated?