Cost Accounting Quiz: Budgeted Financial Statements

7 questions · exam conditions

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Budgeted Financial StatementsQuestion 1 of 7

Atlas Corporation is preparing its budgeted balance sheet and income statement. Budget data shows: Beginning accounts payable $65,000; Purchases on account $298,000; Cash payments to suppliers $285,000; Beginning accrued wages $12,000; Wage expense for the period $87,000; Cash payments for wages $83,000; Other operating expenses $45,000 (all paid in cash). What total amount should appear as current operating liabilities on the budgeted balance sheet?

$78,000

$94,000

$110,000

$126,000

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Cost Accounting Quiz

Cost Accounting Quiz: Budgeted Financial Statements

Practice Budgeted Financial Statements in Cost Accounting with focused quiz questions that help you check what you know, review explanations, and build confidence with test-style prompts.

What this quiz covers

This quiz focuses on Budgeted Financial Statements, giving you a quick way to practice the rules, question types, and explanations that matter most for Cost Accounting.

How to use this quiz

Try each quiz question before looking at the correct answer. Use the explanations to review missed ideas, then come back to similar questions until the pattern feels familiar.

All questions

Question 1

$78,000
$94,000 (correct answer)
$110,000
$126,000

Explanation: Calculate ending accounts payable: $65,000 + $298,000 - $285,000 = $78,000. Calculate ending accrued wages: $12,000 + $87,000 - $83,000 = $16,000. Total current operating liabilities = $78,000 + $16,000 = $94,000. Note that other operating expenses were paid in cash, so they don't create liabilities. Choice A includes only accounts payable. Choice C incorrectly adds some portion of the cash payments. Choice D incorrectly treats the other operating expenses as creating a liability.

Question 2

Meridian Corp is preparing its budgeted balance sheet. Budgeted sales are $450,000, with 30% collected in the current period and 70% in the following period. Beginning accounts receivable is $89,000, representing sales from the previous period that will be collected in the current period. Beginning cash is $22,000. Total budgeted cash receipts are $404,000. What amount should appear as accounts receivable on the budgeted balance sheet?

$135,000
$204,000
$315,000 (correct answer)
$404,000

Explanation: Ending accounts receivable equals current period sales that won't be collected until next period: $450,000 × 70% = $315,000. This represents the portion of current sales that extends into the next period. Choice A incorrectly calculates only the portion collected this period. Choice B appears to add beginning AR to the uncollected portion but uses wrong percentages. Choice D incorrectly uses total cash receipts, which includes collections from prior periods.

Question 3

Pinnacle Industries is preparing its budgeted balance sheet and has the following information: Beginning retained earnings $185,000; Budgeted net income $67,000; Planned dividend payments $18,000; Treasury stock purchases $12,000; Additional paid-in capital increase $25,000. The company also plans to issue $40,000 in new common stock. What amount should appear as retained earnings on the budgeted balance sheet?

$234,000 (correct answer)
$247,000
$259,000
$287,000

Explanation: Ending retained earnings = Beginning retained earnings + Net income - Dividends = $185,000 + $67,000 - $18,000 = $234,000. Treasury stock purchases, additional paid-in capital, and new stock issuances affect other equity accounts but not retained earnings. Choice B incorrectly adds back treasury stock purchases. Choice C incorrectly includes the additional paid-in capital increase. Choice D incorrectly includes all equity transactions as affecting retained earnings.

Question 4

TechFlow Industries is preparing its quarterly budgeted financial statements. The company operates with the following budget parameters: Target ending cash balance $50,000; Beginning cash $28,000; Budgeted cash receipts from customers $275,000; Budgeted cash payments for operations $240,000; Budgeted capital expenditures $35,000; Planned equipment sale (cash proceeds) $8,000. The company has a $75,000 line of credit available at 6% annual interest.

What amount of borrowing, if any, should appear as a short-term liability on the budgeted balance sheet to achieve the target cash balance?

$0
$14,000 (correct answer)
$22,000
$36,000

Explanation: Calculate cash position before borrowing: Beginning cash $28,000 + Customer receipts $275,000 + Equipment sale $8,000 - Operating payments $240,000 - Capital expenditures $35,000 = $36,000. To reach target of $50,000, borrowing needed = $50,000 - $36,000 = $14,000. Choice A ignores the shortfall. Choice C incorrectly omits the equipment sale proceeds. Choice D incorrectly calculates the shortfall by omitting customer receipts or making other computational errors.

Question 5

Sterling Corp is preparing budgeted financial statements. The company's budgeted income statement shows net income of $89,000. Additional budget information: Depreciation expense $15,000; Accounts receivable increase $8,000; Inventory decrease $12,000; Accounts payable increase $6,000; Accrued liabilities decrease $4,000. Beginning cash was $31,000. What amount should appear as ending cash on the budgeted balance sheet?

$141,000 (correct answer)
$145,000
$149,000
$157,000

Explanation: Calculate cash from operations using indirect method: Net income $89,000 + Depreciation $15,000 - AR increase $8,000 + Inventory decrease $12,000 + AP increase $6,000 - Accrued liabilities decrease $4,000 = $110,000 cash from operations. Ending cash = Beginning cash $31,000 + Cash from operations $110,000 = $141,000. Choice B incorrectly adds the accrued liabilities decrease. Choice C incorrectly adds the AR increase instead of subtracting it. Choice D incorrectly treats all working capital changes as positive.

Question 6

Brightstar Manufacturing is preparing its budgeted financial statements for the upcoming quarter. The company has provided the following information: Beginning finished goods inventory is $45,000. Budgeted cost of goods manufactured is $180,000. Budgeted sales revenue is $320,000. The company maintains a gross profit margin of 40% on sales. Beginning accounts receivable is $25,000, and the company expects to collect 85% of current quarter sales during the quarter. Beginning cash is $15,000, and budgeted cash receipts from operations total $287,000. Budgeted cash payments for operations are $245,000.

What is the budgeted ending finished goods inventory that should appear on the budgeted balance sheet?

$33,000 (correct answer)
$42,000
$48,000
$57,000

Explanation: To find budgeted ending finished goods inventory, use: Beginning FG + COGM - COGS = Ending FG. First calculate COGS: Sales revenue $320,000 × (100% - 40% gross margin) = $192,000. Then: $45,000 + $180,000 - $192,000 =

33,000. Choice B incorrectly uses gross profit (

128,000) instead of COGS. Choice C incorrectly adds gross profit to beginning inventory. Choice D incorrectly subtracts gross margin percentage from COGM.

Question 7

Horizon Ltd is developing its budgeted balance sheet. The company's budgeted income statement shows: Sales revenue $680,000; Cost of goods sold $408,000; Operating expenses $195,000; Interest expense $8,000; Income tax expense $20,700. The company's beginning total stockholders' equity was $425,000. During the budget period, the company plans to pay dividends of $30,000 and issue additional common stock for $60,000. What should be the total stockholders' equity on the budgeted balance sheet?

$503,300
$513,300 (correct answer)
$543,300
$573,300

Explanation: First calculate net income: $680,000 - $408,000 - $195,000 - $8,000 - $20,700 = $48,300. Then: Beginning equity $425,000 + Net income $48,300 - Dividends $30,000 + Stock issuance $60,000 = $513,300. Choice A incorrectly omits the stock issuance. Choice C incorrectly omits the dividend payment. Choice D incorrectly adds back the dividend payment instead of subtracting it.