Certified Management Accountant Financial Planning 2

Question 1

A company uses a rolling budget that is updated monthly by adding a new month as the current month ends. This approach is best described as:

Accepted Answer

Continuous (perpetual) budgeting

Answer

A continuous or perpetual budget always covers a fixed future horizon (e.g., 12 months) by adding a new period as each period closes.

Question 2

When preparing a cash budget, which of the following is NOT included as a cash outflow?

Accepted Answer

Depreciation expense

Answer

Depreciation is a non-cash expense and therefore does not appear as a cash outflow in the cash budget.

Question 3

A flexible budget variance is calculated as the difference between:

Accepted Answer

Actual results and the flexible budget for actual volume

Answer

The flexible budget variance isolates price/efficiency differences by comparing actual results to what the budget would have been at the actual level of activity.

Question 4

Which component of the master budget is typically prepared first?

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 company budgets sales of 10,000 units in Q1. Desired ending inventory is 20% of next quarter's budgeted sales of 12,000 units. Beginning inventory is 1,500 units. How many units should be produced in Q1?

Accepted Answer

10,900 units

Answer

Production = Sales + Desired Ending Inventory − Beginning Inventory = 10,000 + 2,400 − 1,500 = 10,900 units.

Certified Management Accountant Practice Test

Certified Management Accountant Practice Test

Certified Management Accountant Financial Planning 2