#1
Which of the following is NOT a key component of budgeting?
Forecasting
Financial Reporting
Planning
Control
#2
What is the purpose of a cash budget?
To forecast sales revenue
To plan for capital expenditures
To manage cash flow
To analyze financial ratios
#3
In what way does budgeting help in resource allocation?
By ensuring all resources are allocated equally
By identifying areas where resources are over or underutilized
By limiting the amount of resources available
By eliminating the need for resource allocation altogether
#4
Which of the following is NOT a function of management control?
Planning
Organizing
Directing
Communicating
#5
What is the primary purpose of a cash flow budget?
To plan for day-to-day expenses
To manage cash flow
To allocate resources to different departments
To plan for long-term investments
#6
What does the term 'Variance Analysis' refer to in budgeting?
Comparing actual financial results to planned or expected results
Analyzing different types of budgets
Calculating total budgeted amount
Forecasting future financial performance
#7
In the context of budgeting, what is the primary purpose of a flexible budget?
To allow for adjustments to changing circumstances
To fix expenses and revenues at a constant level
To minimize costs
To set strict financial targets
#8
What is a 'Zero-Based Budget'?
A budgeting approach that starts from scratch, without considering past budgets
A budgeting method that aims to eliminate all expenses
A budgeting technique that sets all variables at zero
A budgeting process that considers only fixed costs
#9
What is the purpose of a master budget?
To control day-to-day operations
To forecast long-term financial performance
To integrate all budgeting activities into one comprehensive plan
To allocate resources to different departments
#10
Which budgeting method involves setting budgets based on a percentage of sales?
Incremental budgeting
Activity-based budgeting
Zero-based budgeting
Flexible budgeting
#11
What is the role of variance analysis in management control?
To identify and explain differences between actual and budgeted performance
To set financial targets for the upcoming period
To allocate resources efficiently
To forecast future financial trends
#12
Which of the following is NOT a characteristic of a good budget?
Flexibility
Achievability
Inflexibility
Accuracy
#13
Which of the following is a disadvantage of participative budgeting?
Increased motivation and commitment from employees
Higher likelihood of budgetary slack
Improved accuracy of budget forecasts
Faster decision-making process
#14
What is the significance of a rolling budget?
It remains fixed throughout the budgeting period
It is continuously updated to reflect changes in circumstances
It only considers fixed costs
It does not allow for any adjustments
#15
Which budgeting method involves setting budgets to achieve specific goals and objectives?
Incremental budgeting
Activity-based budgeting
Zero-based budgeting
Objectives-oriented budgeting
#16
What is the main difference between a static budget and a flexible budget?
Static budget is adjusted for changes in activity levels, while flexible budget is not.
Flexible budget is prepared for a single level of activity, while static budget adjusts for changes.
Static budget is used by manufacturing firms, while flexible budget is used by service firms.
There is no difference between a static budget and a flexible budget.