Topic 4 : Budgeting

Which of the following best defines the function of a budget?

• To set financial goals and allocate resources

• To monitor employee performance

• To design educational programs

• To evaluate student progress

Answer explanation

1. Bloom’s Taxonomy Level: Understanding (Easy)
   o Correct Answer: A. To set financial goals and allocate resources
   o Explanation: The primary function of a budget is to set financial goals and allocate resources to achieve those goals. This involves planning how to use available funds to support various activities and needs. Monitoring employee performance, designing educational programs, and evaluating student progress are important functions in education but are not directly related to the purpose of a budget.

What approach to budgeting involves evaluating and starting from zero for each budget cycle?

• Site-based Budget

• Incremental Budget

• Zero Budgeting

• Programme Budgeting

Answer explanation

1. Bloom’s Taxonomy Level: Understanding (Average)
   o Correct Answer: C. Zero Budgeting
   o Explanation: Zero budgeting requires evaluating each expense from a zero base for every budget cycle, meaning no previous budget figures are carried forward. Each expense must be justified as if it were new, promoting a thorough review of all spending. Site-based, incremental, and programme budgeting use different approaches that involve various degrees of adjustment and historical data.

Which approach to budgeting is characterized by making adjustments based on the previous budget's figures?

• Site-based Budget

• Incremental Budget

• Limited Plan Budget

• Pragmatic Budget

Answer explanation

1. Bloom’s Taxonomy Level: Understanding (Easy)
   o Correct Answer: B. Incremental Budget
   o Explanation: Incremental budgeting involves adjusting the previous budget's figures to create a new budget. This method adds or subtracts a percentage based on past expenditures, making it easier to manage but potentially perpetuating inefficiencies from previous budgets. Site-based, limited plan, and pragmatic budgets involve different processes and focuses on resource allocation and planning.

Which budget approach is best suited for allocating resources to specific projects or programmes?

• Zero Budgeting

• Programme Budgeting

• Incremental Budget

• Site-based Budget

Answer explanation

1. Bloom’s Taxonomy Level: Understanding (Average)
   o Correct Answer: B. Programme Budgeting
   o Explanation: Programme budgeting is designed for allocating resources to specific projects or programmes. It involves evaluating the costs and benefits of each programme, helping ensure that funds are used effectively for achieving programmatic goals. Zero budgeting, incremental budgeting, and site-based budgeting have different focuses and may not be as specialized for programme-specific resource allocation.

What is the primary focus of site-based budgeting?

• Allocating funds based on central decisions

• Distributing budgetary control to individual school sites

• Implementing incremental changes to previous budgets

• Justifying all expenses from a zero base

Answer explanation

1. Bloom’s Taxonomy Level: Understanding (Easy)
   o Correct Answer: B. Distributing budgetary control to individual school sites
   o Explanation: Site-based budgeting focuses on decentralizing budgetary control to individual school sites, allowing them to make decisions based on their specific needs and priorities. This approach aims to increase flexibility and responsiveness at the local level. Central decisions, incremental changes, and zero-based budgeting are different approaches that do not emphasize local control in the same way.

Which budget approach is characterized by preparing a budget based on a pre-determined plan with limited flexibility?

• Pragmatic Budget

• Site-based Budget

• Limited Plan Budget

• Programme Budgeting

Answer explanation

Bloom’s Taxonomy Level: Understanding (Easy)
o Correct Answer: C. Limited Plan Budget
o Explanation: Limited plan budgeting involves preparing a budget based on a pre-determined plan with restricted flexibility for making adjustments. This approach may provide a framework for spending but can be less adaptable to changing circumstances. Pragmatic, site-based, and programme budgeting offer different levels of flexibility and focus on varying aspects of financial planning.

What is the main purpose of budget preparation?

• To assess previous year's spending

• To allocate financial resources for future periods

• To monitor individual staff performance

• To plan extracurricular activities

Answer explanation

1. Bloom’s Taxonomy Level: Understanding (Easy)
   o Correct Answer: B. To allocate financial resources for future periods
   o Explanation: The main purpose of budget preparation is to allocate financial resources for future periods, ensuring that funds are available to meet planned activities and goals. Assessing previous spending, monitoring staff performance, and planning extracurricular activities are important but are not the central aim of budget preparation.

Which stage of the budget cycle involves assessing how funds have been used and the outcomes achieved?

• Budget Preparation

• Budget Implementation

• Budget Evaluation

• Budget Planning

Answer explanation

1. Bloom’s Taxonomy Level: Understanding (Easy)
   o Correct Answer: C. Budget Evaluation
   o Explanation: Budget evaluation involves assessing how funds have been used and the outcomes achieved. This stage helps determine whether the budget was effective and how well the resources met the intended goals. Budget preparation, implementation, and planning focus on different stages of the budget cycle.

In which approach to budgeting are budgets created based on specific site needs and priorities?

• Programme Budgeting

• Incremental Budget

• Site-based Budget

• Zero Budgeting

Answer explanation

1. Bloom’s Taxonomy Level: Understanding (Easy)
   o Correct Answer: C. Site-based Budget
   o Explanation: Site-based budgeting creates budgets based on specific site needs and priorities, allowing individual sites to tailor their financial plans to their unique circumstances. Programme budgeting, incremental budgeting, and zero budgeting involve different approaches to financial planning.

What is a primary advantage of zero budgeting?

• Simplicity in adjusting past budgets

• Clear allocation based on historical data

• Justification of all expenses from scratch

• Focus on long-term financial planning

Answer explanation

Bloom’s Taxonomy Level: Understanding (Easy)
o Correct Answer: C. Justification of all expenses from scratch
o Explanation: The primary advantage of zero budgeting is that it requires justification of all expenses from scratch, promoting a thorough review and elimination of unnecessary spending. This approach contrasts with methods that rely on historical data or incremental adjustments.