Question

1. An operating budget is the major part of a master budget that focuses on the income statement & its supporting schedules.
2. The major drawback of using historical results for judging current performance is that inefficiencies may be concealed in the past performance.
3. A budget is a quantitative expression of a plan of action.
4. Cash collections from customers include the current month’s cash sales minus collections on credit sales.
5. A sales budget is a prediction of sales, cost, & future profits under a given set of conditions.
6. Cash Receipts Section, cash budget, includes only the expected cash receipts from cash sales & collections on credit sales.
7. Direct Labor Budget Shows both the number of hours & cost of direct labor necessary to meet production requirements.

Answer 1

(1) -- An operating budget is the major part of a master budget that focuses on the income statement & its supporting schedules.

Answer -

An operating budget is the major part of a master budget that focuses on the income statement & its supporting schedules. Hence, the given statement is True

.

(2) -- The major drawback of using historical results for judging current performance is that inefficiencies may be concealed in the past performance.

Answer -

The given statement is True.

.

(3) -- A budget is a quantitative expression of a plan of action.​​​​​​​

Answer -

A budget is a quantitative expression of a plan of action that imposes the formal structure of an organization. Hence, the given statement is True.

.

(4) -- Cash collections from customers include the current month’s cash sales minus collections on credit sales.​​​​​​​

Answer -

The given statement is False, because cash collections from customers include the current month’s cash sales plus collections on credit sales.