Tag: budgeting

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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

Zero base budgeting was first used by ____________________.

  1. U.S. Department of Agriculture

  2. U.K. Department of Agriculture

  3. U.K. Department of Industry

  4. Indian Department of Agriculture
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

The Zero-based budgeting concept was advocated in 1924 by British budget authority Edward Hilton Young. He advocated complete justification of every item requested in a budget. The ZBB concept became more popular only in 1970s. In 1960s, ZBB was formally initiated in the Department of Agriculture of the USA.

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 first step in the system of introducing zero base budgeting is _____________.

  1. Determinations of the extent to which the zero base budgeting is to be introduced

  2. Determination of the objective of budgeting

  3. Preparation of budgets

  4. Development of decision units
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

First and foremost step involved in the zero-based budgeting process is, identifying the decision unit. A decision unit can be a single activity or a cluster of activities which can be independently and meaningfully identified.

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

Zero base budgeting involves __________________.

  1. Cost problems

  2. Time problems

  3. Ranking process problems

  4. All of these
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

The limitations of ZBB, which arise due to certain operational problems, are as follows:

1. Implementation Problems:

The concerned managers should continue in the same decision units. If they are transferred frequently to other departments, it may lead to waste of time and resources in training and developing new managers.

2. Formulation Problems:

Considerable problems may arise while formulating decision packages. 

3. Ranking Problems:

Problems may arise in ranking of decision packages. General Managers may like to continue their favourable projects for the reasons best known to them. Ranking may also become difficult when there are a large number of decision packages, particularly in a multi-product manufacturing firm.

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 most important step involved in the ZBB process.

  1. Preparation of budgets

  2. Developments of decision packages

  3. Development of decision units

  4. Review and ranking of decision packages
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

There are any number of ways to rank decision packages managers will no doubt employ various methods of ranking. The main point is that the ranking of decision packages is an important process of ZBB. An important element of the ZBB process is that it forces prioritization of all programs and activities.

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

Operations budgets normally cover a period of ________________.

  1. One year or less

  2. One to two years

  3. One to five years

  4. One to ten years
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Operating budgets are typically assembled on a monthly or quarterly basis and cover a one-year period.

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 last stage involved in the ZBB process is _____________.

  1. Development of decision units

  2. Preparation of budgets

  3. Control & Monitoring of decision packages

  4. Determination of the objective of budgeting
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

CONTROLLING AND MONITORING

This is the last step in preparing zero-based budgeting. In this step, decision packages are monitored and evaluated for their performance and output. Measuring the performance of the decision packages helps the management to understand whether the allocation of resources is done accurately or not.

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

What type of budget is designed to take into account forecast changes in costs, prices etc. _______________.

  1. Rolling budget

  2. Flexible budget

  3. Functional budget

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

A rolling budget is continually updated to add a new budget period as the most recent budget period is completed. Thus, the rolling budget involves the incremental extension of the existing budget model. By doing so, a business always has a budget that extends one year into the future.

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

Forecasting done is based on the ______________.

  1. Past figures

  2. Historical data

  3. Present (Existing) data

  4. Expected events

  5. All of the above
Reveal answer Fill a bubble to check yourself
E Correct answer
Explanation

Forecasting involves identification of past trend and projecting it into the future. It is based on the all the past figures, historical data ,existing data and expected events.

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 meaning of 'fund' in funds flow statement is ___________.

  1. Cash

  2. Net working capital

  3. Gross working capital

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

Fund flow statement shows that the flow of funds during the year. The meaning of funf in fund flow statement is net working capital.

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

Which of the following is not a motive for holding cash?

  1. Transaction purposes

  2. Precaution against unexpected expenses

  3. Extending loans to group comanies

  4. Speculation purposes

  5. Mismatch between cash inflows and outflows.
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

The following points highlight the five main motives for holding cash balances in a firm. The motives are: 1. Transaction Motive 

2. Precautionary Motive 
3. Speculative Motive 
4. Future Requirements 
5. Compensating Balances.