Variance Reporting and Sources of Finance

A variance reort is a report that:

• Compares the assets and liabilities of a business.

• Compares a business' actual financial outcomes against its budgeted financial outcomes.

• Compares the debits and credits in balance sheet

• Compares a business' cash inflow and its cash outflow.

Variance reporting helps with:

A. Understanding a business' cashflow position.

B. Understanding the business' operating trends.

C. Decision making.

• A & C

• A only.

• A, B, & C

• B & C

Those who benefit from variance reports are _____?

• Accountants

• Team Leaders

• Generally those who make financial decisions on behalf of the business.

• Shareholders.

When are variance reports prepared?

A. Typically, monthly.

B. When actual figures are available.

• A

• A & B

• B

True or False: A favourable variance is when actual

cash inflows (receipts) are higher than budgeted.

• True

• False

True or False: An unfavourable variance is when actual

cash outflows (payments) are lower than budgeted.

• True

• False

A business has budgeted $6000 for 'receipt from debtors' for the month of July.

If the actual figure was 9000, the variance was:

• 3000 UF

• 2000 F

• 3000 F

• 2000 UF

For June, the business budgeted $25000 for a vehicle purchase but ended up paying $33500. The variance was:

• 9500 F

• 9500 UF

• 7500 UF

• 8500 UF

True or False: Sources of finance is just another way of saying 'where the business obtains money to fund its business activity'.

• True

• False

When a business has zero cash reserves, they are unable to:

A. Pay their expenses.

B. Buy stock and pay creditors.

C. Expand the business.

D. Pay their workers.

• A, B, & C

• A & C

• B, C & D

• A, B, C & D