Tag: public finance, budget and fiscal policy

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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 summary of all functional budgets in a capsule form.

  1. Master budget

  2. Cash budget

  3. Flexible budget

  4. Zero-base budget
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

The Master Budget is consolidated summary of the various functional budgets. It has been defined as “a summary of the budget schedules in capsule form made for the purpose of presenting, in one report, the highlights of the budget forecast”.

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 detailed plan of operation for some specific future period is called _____________.

  1. Budget

  2. Execution

  3. Decision making

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

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.

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.