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ACC 241 Exam 3 ASU 60 Questions with Verified Answers,100% CORRECT
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ACC 241 Exam 3 ASU 60 Questions with Verified Answers
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ACC 241 Exam 3 ASU 60 Questions with Verified AnswersBudget Committee - CORRECT ANSWER A group of upper managers who are
responsible for overall policy matters relating to the budget program and for
coordinating the preparation of the budget and its final review approval
Cost Center - CORRECT ANSWER A business unit that is only responsible for the
costs that it incurs. The manager of this unit is not responsible for revenue
generation or asset usage. The performance of this unit is usually evaluated
through the comparison of budgeted to actual costs
Financial Budgets - CORRECT ANSWER The budgets that project the collection and
payment of cash, as well as forecast the company's budgeted balance sheet
Investment Center - CORRECT ANSWER A business unit within an entity that has
responsibility for its own revenue, expenses, and assets. Management evaluates
the unit based on its return on those assets invested specifically in that unit
Line of Credit - CORRECT ANSWER A commitment from a lender to pay a company
whenever it needs cash, up to a pre-set maximum level. It is generally secured by
company assets, and for that reason, bares an interest rate not far above the
prime rate. The bank will typically charge an annual maintenance fee, irrespective
of the amount of funds drawn down, on the grounds that it has invested in the
completion of paperwork for the loan. The bank will also likely require an annual
audit of key accounts and asset balances to verify the company's financial
situation is in line with the bank's assumptions
Management by Exception - CORRECT ANSWER The practice of examining the
financial and operational results of a business, and only brining issues to the
attention of management if results represent substantial differences from the
budgeted or expected amount.
Master Budget - CORRECT ANSWER The comprehensive planning document for
the entire organization. Tis includes the operating budgets and the financial
, budgets. It is typically presented in either a monthly or quarterly format, and
usually covers a company's entire fiscal year. An explanatory test may be
included, which explains the company's strategic direction, how the document
will assist in accomplishing specific goals, and the management actions needed to
achieve the budget.
Operating budgets - CORRECT ANSWER The budgets needed to run the daily
operations of the company, culminate in a budgeted income statement
Participative budget - CORRECT ANSWER A budgeting process under which those
people impacted by a budget are involved in the budget creation process. This
bottom-up approach to budgeting tends to create budgets that are more
achievable than are top-down budgets that are imposed on a company by senior
management, with much less participation by employees. This budgeting is also
better for morale, and tends to result in greater efforts by employees to achieve
what they predicted in the budget. However, a budget that is purely this type,
does not take high-level strategic considerations into account, so management
needs to provide employees with guidelines regarding the overall direction of the
company, and how their individual departments fit into that direction. Budgets
that are purely of this nature may also include slack which inhibits the
organization from achieving greater efficiency.
Profit Center - CORRECT ANSWER A business segment whose manager has
responsibility for both cost and revenue. Like a cost center, this type of unit does
not have responsibility for the assets it uses. Managers of these units are often
evaluated by comparing actual profit to targeted or budgeted profit. Segmented
income statements should be used to evaluate the performance of managers in
this unit
Responsibility Accounting - CORRECT ANSWER A system of evaluating the
performance of each responsibility center and its manager
Responsibility Center - CORRECT ANSWER Any part of an organization whose
manager has control over cost, revenue, or investment funds
Revenue Center - CORRECT ANSWER Unit within an organization for which the
manager is only responsible for generating revenues
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