#1
Which of the following is a primary purpose of business budgeting?
To allocate resources efficiently
ExplanationEfficient resource allocation.
#2
What is the difference between a static budget and a flexible budget?
Static budget is prepared in advance, while flexible budget adjusts for changes in activity levels
ExplanationStatic: Planned in advance. Flexible: Adjusts for changes.
#3
Which budgeting method is commonly used for zero-based budgeting?
Bottom-up budgeting
ExplanationStarts from zero, bottom level involvement.
#4
What is the primary difference between a master budget and a functional budget?
Master budget covers all areas of the organization, while functional budget focuses on specific functions or departments
ExplanationMaster: Entire organization. Functional: Specific areas/departments.
#5
Which budgeting technique involves estimating future financial results based on historical data and trends?
Forecasting
ExplanationPredicting future based on past data and trends.
#6
What is the purpose of variance analysis in budgeting?
To determine the difference between actual and budgeted amounts
ExplanationIdentifying differences between actual and planned amounts.
#7
What does the term 'rolling budget' refer to?
A budget that is revised periodically, adding a new budget period as one period expires
ExplanationContinuous revision, adding new period as old expires.
#8
Which of the following is NOT a benefit of effective budgeting and planning?
Increased employee turnover
ExplanationDoesn't contribute to high employee turnover.
#9
What is the main disadvantage of participative budgeting?
It may result in conflicts between departments
ExplanationPotential for inter-departmental conflicts.
#10
Which budgeting approach involves setting budgets based on the activities that drive costs in an organization?
Activity-based budgeting
ExplanationBudgets based on cost-driving activities.
#11
What is a key characteristic of a balanced scorecard approach to budgeting?
It aligns financial goals with non-financial objectives
ExplanationAligns financial and non-financial objectives.