Tag: budgeting
Questions Related to budgeting
a) There is no difference between a forecast and a budget
b) Sales budget is the most important budget among all budgets.
Of these
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Both (a) and (b) are true
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(a) is false, but (b) is true
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(a) is true, but (b) is false
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Both (A) and (B) are false
Forecasting is a technique that uses historical data as inputs to make informed estimates that are predictive in determining the direction of future trends.
The essential of budget.
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Prepared in advance
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Relates to a future period
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Statement expressed in monetary or physical units
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All the above
- It is an estimate of the economic activities of an entity which related to a specified future period.
- It must be written and approved by the appropriate authority.
- It should be modified or corrected, whenever, there is a change in circumstances.
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Statement expressed in monetary or physical units
- It is prepared on the basis of past experiences and trends in the business.
- It is a business practice, which is used to forecast the operating activities and financial position of the business.
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Prepared in advance
The budget manual is a _____________.
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Written document
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Booklet
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Either (A) or (B)
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Oral document
A budget manual is a set of rules and instructions used by large organizations to prepare their budgets and related reports.
A cash budget can be prepared by ______________.
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Receipts and Payments Method
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The Adjusted Profit and Loss Account Method
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The Balance Sheet Method
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Any of the above methods
The following are three methods of preparing cash budget:
(i) Receipt and Payment Method
(ii) Adjusted Project and Loss Method
(iii) Balance Sheet Method
A budget prepared on the basis of a standard or a fixed level of activity is called a ____________.
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Fixed budget
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Flexible budget
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Sales budget
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Master budget
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.
Father of zero base budgeting.
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L.R. Dicksee
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Peter A. Pyhrr
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Peter K. Drucker
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L.J. Gordon
Mr. Pyhrr developed zero-based budgeting when he was a controller at Texas Instruments between 1969 and 1971.
__________ shows the anticipated sources and utilisation of cash.
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Master budget
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Cash budget
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Sales budget
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Flexible budget
A cash budget itemizes the projected sources and uses of cash in a future period.
Cash budget is a _____________.
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Short-term budget
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Long-term budget
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Medium term budget
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None of the above
The cash budget is one of the primary tools used in short-term financial planning for cash flow.
Capacity ratio is equal to ________________________.
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$\dfrac {\text {Standard hours for actual production}}{\text {Budgeted hours}}\times 100$
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$\dfrac {\text {Actual hours worked}}{\text {Budgeted hours}}\times 100$
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$\dfrac {\text {Standard hours for actual production}}{\text {Actual hours worked}}$
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None of the above
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%.
_________ is a document which sets out the utilisation of the persons engaged in budgetary control.
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Organisational chart
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Budget manual
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Chart of accounts
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None of the above
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.