Tag: budgeting

Quizzes (3) Questions (108)

Questions Related to budgeting

Multiple choice commercial studies budgeting meaning, comparison, types, utility and limitations of budgets public finance, budget and fiscal policy public expenditure and public revenue

a) There is no difference between a forecast and a budget
b) Sales budget is the most important budget among all budgets.
Of these

  1. Both (a) and (b) are true

  2. (a) is false, but (b) is true

  3. (a) is true, but (b) is false

  4. Both (A) and (B) are false
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Forecasting is a technique that uses historical data as inputs to make informed estimates that are predictive in determining the direction of future trends.

A budget is a financial plan for a defined period, often one year. It may also include planned sales volumes and revenues, resource quantities, costs and expenses, assets, liabilities and cash flows.
A sales budget is only an estimate of anticipated revenues, it is a vital means of projecting income based on factors such as economic conditions, competition, production resources and expenses.

Multiple choice commercial studies budgeting meaning, comparison, types, utility and limitations of budgets public finance, budget and fiscal policy public expenditure and public revenue

The essential of budget.

  1. Prepared in advance

  2. Relates to a future period

  3. Statement expressed in monetary or physical units

  4. All the above
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation
  1. It is an estimate of the economic activities of an entity which related to a specified future period.
  2. It must be written and approved by the appropriate authority.
  3. It should be modified or corrected, whenever, there is a change in circumstances.
  4. Statement expressed in monetary or physical units
  5. It is prepared on the basis of past experiences and trends in the business.
  6. It is a business practice, which is used to forecast the operating activities and financial position of the business.
  7. Prepared in advance
Multiple choice commercial studies budgeting meaning, comparison, types, utility and limitations of budgets public finance, budget and fiscal policy public expenditure and public revenue

A cash budget can be prepared by ______________.

  1. Receipts and Payments Method

  2. The Adjusted Profit and Loss Account Method

  3. The Balance Sheet Method

  4. Any of the above methods
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

The following are three methods of preparing cash budget:

(i) Receipt and Payment Method
(ii) Adjusted Project and Loss Method
(iii) Balance Sheet Method

Multiple choice commercial studies budgeting meaning, comparison, types, utility and limitations of budgets public finance, budget and fiscal policy public expenditure and public revenue

A budget prepared on the basis of a standard or a fixed level of activity is called a ____________.

  1. Fixed budget

  2. Flexible budget

  3. Sales budget

  4. Master budget
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

 A fixed budget is a budget that does not change or flex for increases or decreases in volume. ("Volume" could be sales, units produced, or some other activity.) A fixed budget is also known as a static budget.

Multiple choice commercial studies budgeting meaning, comparison, types, utility and limitations of budgets public finance, budget and fiscal policy public expenditure and public revenue

__________ shows the anticipated sources and utilisation of cash.

  1. Master budget

  2. Cash budget

  3. Sales budget

  4. Flexible budget
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

 A cash budget itemizes the projected sources and uses of cash in a future period. 

The Sources of Cash section contains the beginning cash balance, as well as cash receipts from cash sales, accounts receivable collections, and the sale of assets.

Multiple choice commercial studies budgeting meaning, comparison, types, utility and limitations of budgets public finance, budget and fiscal policy public expenditure and public revenue

Capacity ratio is equal to ________________________.

  1. $\dfrac {\text {Standard hours for actual production}}{\text {Budgeted hours}}\times 100$
  2. $\dfrac {\text {Actual hours worked}}{\text {Budgeted hours}}\times 100$
  3. $\dfrac {\text {Standard hours for actual production}}{\text {Actual hours worked}}$

  4. None of the above
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

The capacity utilisation ratio measures whether the total direct labour hours worked in a production cost centre in a period was greater or less than what was budgeted. It is calculated as: (Actual direct labour hours worked ÷ budgeted direct labour hours) × 100%.

Multiple choice commercial studies budgeting meaning, comparison, types, utility and limitations of budgets public finance, budget and fiscal policy public expenditure and public revenue

_________ is a document which sets out the utilisation of the persons engaged in budgetary control.

  1. Organisational chart

  2. Budget manual

  3. Chart of accounts

  4. None of the above
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

CIMA London defines a budget manual as “a document schedule or booklet which sets out, inter alia, the responsibilities of the persons engaged in the routine of and the forms and records required for budgetary control”. Thus, it is a written document which guides the executives in preparing various budgets.