Question

13.Freight expenses –

Select one:

a. cannot be allocated when they apply to purchases of assets if the asset accounts do not allow allocations

b. are allocated separately from the other accounts used in the purchase

c. are allocated in the same proportion as the other accounts used in the purchase

d. can never be allocated

14.What reports are affected by the budgeting process –

Select one:

a. customer sales summary reports

b. balance sheets

c. supplier purchases summary reports

d. income statements

15.Budget frequencies should be changed-

Select one:

a. when the business cycle changes

b. whenever you change budget amounts

c. when you want to report income for a shorter period than the budget

d. when you want to report income for a longer period than the budget

Answer 1

The answers to the above questions are as follows with simplified explanation.

13. Freight expenses are allocated seperately from the other accounts that are used in the purchase. Freight is a direct expense it does not depend on any other accounts to get allocated.

14. Income statements are affected by the budgeting process, budget is prepared to monitor the financial performance, which is reflected in the income statement.

15. When the business cycle changes, usually budget is prepared for a financial year, in order to measure the performance, so budget frequencies should be changed for every business cycle.