Budgets

To develop realistic budgets, existing businesses usually base their estimates on:

• governmental information

• competitors' activities

• past performance

• industry data

The owners of C&G Auto regularly review their budget to determine whether they are:

• offering loans to employees

• paying interest to customers

• following their financial plans

• receiving discounts from vendors

After a business designates categories of expense in its budget, it:

• applies a formula

• attaches a time limit

• appoints an accountant

• allocates a dollar amount

How is a budget like a tree?

• A budget changes from season to season.

• A budget requires care and nurturing, like a young tree.

• A budget is divided into categories and subcategories similar to branches.

• A budget is supported by strong sales, like a tree is supported by strong roots.

Which is a factor that might cause a business to adjust its budget figures?

• local elections

• economic trends

• sales procedures

• operating policies

What is the relationship between a business’s goals and its budget?

• Goals are established after the budget so that they are realistic

• Goals state the big picture and are unrelated to a detailed budget

• Budgets reflect real business activity while goals are usually unrealistic

• Budgets translate a business’s goals into actual means for accomplishing them.

The master budget for Aubrey's Day Care Center is made up of information from:

• the previous year's budget, with a 10% increase

• internal sales forecasts and the probable level of competition.

• specialized budgets that are handed down from management.

• specialized budgets that are generated by individual departments

The difference between a budgeted amount and an actual amount is called

• the balance sheet.

• a variance.

• financial evaluation.

• a safety net.

Comparing budgeted and actual amounts can be used to evaluate

• employee performance

• the accounting department

• the level of competition

• most aspects of a business

Why is it important for a business to budget a certain amount of money to savings?

• To pay stockholders

• To avoid financial crisis

• To satisfy customers

• To prevent governmental control