Budgeting Fundamentals Quiz
Challenge yourself with these budgeting questions covering fundamentals, methods, and key concepts. Test your budgeting savvy now!
#1
What is a budget?
A financial plan for spending
A document for legal purposes
A software application
A type of tax
#2
Which of the following is not a component of a budget?
Income
Expenses
Debt
Savings
#3
What is the main purpose of creating a budget?
To restrict spending
To increase debt
To track and control financial activities
To maximize income
#4
What does a 'balanced budget' mean?
Spending exactly the same amount as earning
Having equal amounts in savings and expenses
Spending more than earning
Having a surplus of income
#5
What is zero-based budgeting?
A budgeting method where expenses must be justified for each new period
A budgeting method that assumes the same expenses as the previous period
A budgeting method that disregards expenses entirely
A budgeting method that only considers income
#6
What is the purpose of a cash flow statement in budgeting?
To track money coming in and going out
To calculate total assets
To assess market trends
To analyze employee performance
#7
What is the difference between fixed and variable expenses?
Fixed expenses change regularly, while variable expenses remain constant.
Fixed expenses remain constant, while variable expenses change regularly.
Fixed expenses are optional, while variable expenses are mandatory.
Fixed expenses are related to income, while variable expenses are not.
#8
What is the purpose of a budget variance analysis?
To calculate total expenses
To compare actual financial results with budgeted amounts
To forecast future financial trends
To evaluate investment opportunities
#9
Which budgeting method involves allocating a portion of income to different expense categories?
Incremental budgeting
Cash envelope system
Activity-based budgeting
Zero-based budgeting
#10
What is the key principle behind the envelope budgeting method?
Allocating a specific amount of cash for each spending category
Investing all income in stocks
Using credit cards for all purchases
Never budgeting for savings
#11
What does the term 'rolling budget' refer to?
A budget that is adjusted monthly
A budget that remains unchanged
A budget that rolls over surplus funds to the next period
A budget that is prepared annually
#12
In the context of budgeting, what is a 'sunk cost'?
A cost that has already been incurred and cannot be recovered
A cost that can be easily adjusted in the budget
A cost that is not included in the budget
A cost that is related to future expenses
#13
What is the primary objective of 'activity-based budgeting'?
To allocate resources based on expected activities
To ignore activity levels when budgeting
To allocate resources equally across all departments
To base budgeting solely on historical data
#14
What is the primary purpose of a capital budget?
To plan for short-term expenses
To manage daily operational costs
To allocate funds for long-term investments
To cover unexpected emergency costs
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