Budgeting

What are budgets?

• Plans for the financial performance of a department

• The overall process of preparing for the future

• The entire process of constructing and using budgets

• Detailed plans for obtaining and using resources during a specified period

To what are budgets applied?

• The process of constructing and using budgets

• The overall process of preparing for the future

• The financial performance of a department, a service, a contract, or the organisation as a whole

• Detailed plans for obtaining and using resources during a specified period

Budgets should be considered as what type of tools by managers?

• Accounting tools

• Managerial tools

• Performance tools

• Communication tools

What is one of the purposes of budgets as mentioned in the learning material?

• To establish financial benchmarks for control

• To calculate profit margins

• To track employee attendance

• To monitor stock prices

What is a benefit of budgets in terms of performance?

• They guarantee an increase in sales

• They inform managers about what needs to be done to improve performance

• They ensure compliance with legal standards

• They provide a detailed analysis of competitors

Which of the following is NOT one of the decisions that must be made regarding a business's budgeting process?

• General approach to the process

• Timing of the budget(s)

• Basis of the forecast

• Allocation of resources

What approach to budgeting involves budgets originating at the department or program level and then being aggregated and approved by senior managers?

• Top-down budgeting

• Bottom-up budgeting

• Lateral budgeting

• Reverse budgeting

In which budgeting approach does little negotiation take place between the department and senior managers?

• Top-down budgeting

• Bottom-up budgeting

• Lateral budgeting

• Reverse budgeting

What is the purpose of using more frequent budgets like quarterly ones?

• To ensure timely feedback and control

• To follow the same timing pattern

• For planning purposes

• To set standards for the coming year

Do all budget types or subunits in an organisation have to follow the same timing pattern?

• Yes, they all follow the same timing pattern

• No, not all budget types or subunits follow the same timing pattern

• Yes, but only for out years budgets

• No, they all follow different timing patterns for planning purposes