Certified Management Accountant Budgeting and Forecasting 1

Question 1

A flexible budget differs from a static budget in that a flexible budget:

Accepted Answer

Adjusts revenues and costs based on actual activity levels

Answer

A flexible budget recalculates expected revenues and costs at different levels of activity, allowing meaningful comparison to actual results.

Question 2

Under zero-based budgeting (ZBB), each budget period requires managers to:

Accepted Answer

Justify all expenditures from scratch, regardless of prior spending

Answer

ZBB requires every line item to be justified anew each period rather than simply rolling forward prior-period amounts.

Question 3

A rolling (continuous) budget is best described as one that:

Accepted Answer

Adds a new period as the most recent period expires, maintaining a constant planning horizon

Answer

A rolling budget continuously extends the planning horizon by adding a new future period each time the nearest period ends.

Question 4

Which budget is typically prepared first when constructing a master budget for a manufacturing company?

Accepted Answer

Sales budget

Answer

The sales budget is the starting point of the master budget because all other operating budgets depend on the projected sales volume.

Question 5

A cash budget is primarily used by management to:

Accepted Answer

Forecast periods of cash surplus or shortage to plan financing needs

Answer

The cash budget projects cash inflows and outflows over time, enabling management to anticipate shortfalls and arrange financing or identify surplus funds for investment.

Certified Management Accountant Practice Test

Certified Management Accountant Practice Test

Certified Management Accountant Budgeting and Forecasting 1