T3 Budgets

What is a master budget?

• A collection of individual area and activity budgets into a comprehensive financial plan for a future period

• A list of goals, objectives and strategies of a business of a future period

• A report of all expected cash receipts, payments and bank balance of a future period

• A collection of individual area and activity budgets into a comprehensive financial plan for a past period

What is a cash budget?

• A collection of individual area and activity budgets into a comprehensive financial plan for a future period

• A list of goals, objectives and strategies of a business of a future period

• A report of all expected cash receipts, payments and bank balance of a future period

• A collection of individual area and activity budgets into a comprehensive financial plan for a past period

Top management only pretends to grant participation from lower-level managers. This is an example of ...

• Pseudo Participation

• Budgetary slack

• problems setting correct standards

• All of these are correct

The manager deliberately underestimates revenues or overestimates costs so they can easily meet the budget.

This is an example of ...

• Pseudo Participation

• Budgetary slack

• problems setting correct standards

• All of these are correct

The manager sets a budget target that is too hard to achieve.

This is an example of ...

• Pseudo Participation

• Budgetary slack

• problems setting correct standards

• All of these are correct

Which of the following is an advantage of budgeting

• It forces managers to forward plan & improves the functions of communication and co-ordination

• It provides resource information that can be used to improve decision-making

• Sets benchmarks that can be used to evaluate performance

• All of these are advantages

Which of the following is NOT true about cash budgets?

• The cash budget is one of the most important budgets in the master budget

• The cash budget is the detailed plan that shows all expected sources and uses of cash

• Cash Budget is a form of cash control

  Actual cash receipts & payments can be compared to the budget estimates

• The cash budget is a report that shown all cash inflows and outflows for a prior period

What is participative budgeting?

• Involving junior managers and other staff in the budget creation process

• Top management only pretends to grant participation from lower-level managers

• Employees participate in performance reviews

• All of these are correct

WHich of these is an advantage of participatory budgeting?

• “Buy-in” more likely - budget’s goals become the manager’s goals

• Fosters a sense of responsibility to junior managers and fosters creativity

• People involved in setting their own goals will work harder to achieve them.

• All of these are advantages

What is budget analysis

• A comparison of actual results with the budgetted estimates

• Analysis of pervious cash flows so that a budget can be prepared

• Analysis of the prepared budget at the start of the budget period

• All of these are correct