Worksheets3.9 Budgets & Budgeting Vocab (HL)
Total questions: 20
Worksheet time: 11mins
A detailed financial plan for the future
Variance Analysis
Budgetary Control
Financial Strategy
Budget
Budgeting is the process of creating, maintaining, or analyzing a budget in order to reduce _____________ and improve _____________
Risk, Decision Making
Outflows, Inflows
Profits, Strategy
Costs, Strategy
The budgeting "process" includes all of the following except:
Planning
Setting
Delegating
Monitoring
Controlling
When the responsibility for budgetary control is given to less senior management
Delegated Budget
Budget Process
Incremental Budgting
Budgetary control
The "budget process" is the series of stages or steps taken to ensure the budget is effectively planned, reviewed, and adjusted.
True
False
Type of budget in which the previous year's budget is is used as a baseline for a general increase or decrease in the budget for the coming year.
Zero Based Budget
Incremental Budget
Standard Budget
Strategic Budget
The type of budget in which budget holders are forced to provide reasons for why they should receive budgetary funds each year
Zero-based Budget
Incremental Budget
Delegated Budget
Strategic Budget
A section of business (that may or may not exist physically) for which specific costs can be identified and attributed.
Profit Center
Cost Center
Budget Holder
Strategic business division
In order for a profit center to be created, a firm must be able to identify both _________ and _________ from the relevant business area.
Profit and variances
Inflows and outflows
Costs & revenue
Favorable and unfavorable variances
The difference between the predicted and actual budgeted figures is known as:
Variance
Adverse variance
Profit
Favorable variance
Favorable variances are those that
are positive
lead to lower than expected profit
lead to higher than expected profit
are unexpected
Budgetary "control" is any action take by the budget holder to ensure the firm or department will achieve a favorable variance.
True
False
Strategic Planning is best defined as
Analyzing past and future financial data to increase competitiveness
Any method or course of action used to achieve the firm's objectives
The process of considering or discussing how the firm might best go about achieving its objectives in the future.
Controlling and monitoring the current budget to ensure the variance is not adverse
Which of the following is not a limitation of a budget?
Focused on the short term
Like other predictions, they may not be 100% accurate
May lack Flexibility
Can be time consuming to make
Requires a wide range of available financing to ensure accuracy
When planning a budget, predicting sales revenue (income) is more challenging than predicting costs
True
False
Favorable and positive variances are the same thing
True
False
Firms that operate in rapidly changing markets should pursue ____________ budgets rather than _________ budgets.
Flexible, incremental
Incremental, flexible
The budgeting system that requires budget holders to justify the money that they wish to spend is known as:
Budgetary control
Flexible budgeting
Zero Budgeting
Incremental Budgeting
Which of the following is NOT a possible cause of an adverse variance:
Labor costs go up due to overtime
Raw materials costs go up around the world
Overhead or fixed costs are lower than expected
Sales revenue is not as high as expected
Which represents the correct answers to the chart above?
1) Adverse 2) 100 3) Favorable 4) 100,000 5) Adverse
1) Favorable 2) 100 3) Adverse 4) 120,000 5) Adverse
1) Favorable 2) 80 3) Adverse 4) 120,000 5) Favorable
1) Adverse 2) 100 3) Adverse 4) 120,000 5) Favorable
