BUDGETING

What is a budget?

• A summary of the previous year's goals and objectives

• A detailed record of past financial performance

• A plan for the future expressed in financial terms

• A list of an organization’s expenses and income

Which of the following is NOT a purpose of budgeting?

• To assist management with planning functions

• To allocate resources effectively

• To provide an early warning system for potential problems

• To discourage communication within the organization

Budgeting helps management by providing:

• Authority for action and benchmarks for comparison

• Financial reports for past activities

• A decentralized approach to decision-making

• Unlimited resources to achieve goals

What is a key characteristic of the Top-down Approach to budgeting?

• It is the most motivating budgeting approach

• Lower-level employees are not involved in budgeting decisions

• Employees at all levels participate in budget preparation

• It fosters a sense of ownership among employees

Which approach to budgeting involves multi-dimensional communication and motivates lower-level staff?

• Imposed Budgeting

• Flexible Budgeting

• Top-down Approach

• Bottom-up Approach

Which type of budget remains unchanged regardless of activity levels?

• Static Budget

• Operating Budget

• Participative Budget

• Flexible Budget

A budget prepared for a range of activity levels is known as a:

• Fixed Budget

• Flexible Budget

• Static Budget

• Capital Budget

The planning function of budgeting involves:

• Formulating methods and strategies to implement objectives

• Taking corrective actions to meet organizational goals

• Ensuring daily operations run smoothly

• Comparing actual and budgeted results

Which of the following is concerned with the daily running of the organization?

• Controlling

• Planning

• Directing

• Decision-making

Which function of budgeting ensures that an organization minimizes the consequences of unexpected events?

• Decision-making

• Controlling

• Directing

• Planning