BUDGETS (PFF) - WEEK 2

A budget is a plan for spending and saving money.

• True

• False

Why is it important to keep a budget?

• Budgets make sure you do not spend more money than you can afford.

• Budgets can help you save for large purchases.

• Budgets show you how much money you get and spend.

• All of the above.

The sales budget is prepared in advance and is the basis for the preparation of other budgets, therefore the sales budget is called?

A business may prepare for a cash deficit by:

• reducing planned profits

• reducing planned cash payments

• reducing capital contributions

• increasing loan payments

A cash budget is used to determine:

• profit

• cash closing balance

• the value of the business

• the debts of the business

This budget shows the units that must be produced to meet anticipated sales.

• Direct materials

• Master

• Sales

• Production

Who is responsible for the budget?

• Accountants

• Shareholders

• Investors

• Management

When calculating a production budget, which figure comes first?

• Sales

• Opening Inventory

• Closing Inventory

If the Closing Inventory balance is 500 for February, what is the Opening Inventory of March?

The Closing Inventory of one month is the same as the Opening Inventory of the previous month. True or False

• True

• False