Budgeting Quiz

What is the purpose of budgeting?

• To monitor the stock levels

• To reduce the number of employees

• To increase sales by 20%

• To improve communication within the organization

What is the main cause of cash-flow problems for small businesses?

• Decrease in costs

• Strong sales performance

• Unexpected increase in sales

• Late or failed payments from customers

What is the main benefit of budgeting for a business?

• Increased financial control

• Decreased communication within the organization

• Limited resource allocation

• Reduced management control

What is the main purpose of variance analysis in budgetary control?

• To establish formal methods of communication

• To allocate resources effectively

• To monitor and react to unplanned changes from the budgeted figure

• To justify all expenditure made

What is the main difference between historical budgeting and zero-based budgeting?

• Historical budgeting is based on previous year's budget, while zero-based budgeting starts from zero

• Historical budgeting starts from zero, while zero-based budgeting is based on previous year's budget

• Both types of budgeting are the same

• Neither of the options

What is the main type of budgeting that involves justifying all expenditure made?

• Both types of budgeting

• Zero-based budgeting

• Neither of the options

• Historical budgeting

What is the main function of budgets in supporting an organization's finance and marketing?

• Motivates managers to look at alternative options

• Reduces unnecessary costs

• Helps with allocation of resources

• Limits the tendency for budgets to increase annually

What is the main procedure for monitoring budgets in large businesses?

• Collecting feedback, checking targets and communicating regularly with budget holders

• Setting production, marketing and financial budgets

• Establishing the aims and objectives of the business

• Breaking down the budget further

What is the main cause of adverse sales variances?

• Favourable weather

• Logistical problems that meant stock did not arrive with the customer on time

• Successful advertising campaign

• Effective bonus scheme for salesmen

What is the main benefit of zero-based budgeting?

• Motivates managers to look at alternative options

• Improves control

• Limits the tendency for budgets to increase annually

• Reduces unnecessary costs