Unit 16:Introduction to Budgeting: Purpose - Quiz

What does “performance benchmarking” mean in budgeting?

• Comparing actual performance to budget goals

• Hiring more staff to meet demand

• Borrowing money from banks

• Paying taxes on time

How does budgeting support strategic planning?

• Converts long-term goals into financial objectives

• Eliminates marketing expenses

• Provides legal compliance

• Ensures shareholder voting rights

Which benefit of budgeting helps avoid crises by preparing for cash flow issues?

• Performance benchmarking

• Strategic planning

• Financial stability

• Market analysis

Which benefit helps prioritize spending on high-impact activities?

• Resource allocation

• Static budgeting

• Revenue forecasting

• Tax filing

How does budgeting help employees and managers stay accountable?

• By creating clear financial targets and KPIs

• By raising employee wages

• By predicting inflation rates

• By ensuring tax refunds

What is the biggest budgeting challenge for seasonal businesses like Trendy Threads?

• Managing employee turnover

• Balancing seasonal revenue with fixed expenses

• Filing annual taxes

• Expanding into new markets

Which expense for Trendy Threads Boutique is fixed every month?

• Salaries

• Rent

• Marketing campaigns

• Utilities

Which of the following would be considered a variable expense?

• Rent

• Utilities

• Loan repayment

• Insurance

What is the danger of unrealistic projections in budgeting?

• Increased employee morale

• Financial shortfalls

• Reduced tax payments

• Higher profits

Why should businesses include a contingency reserve?

• To pay employee bonuses

• To cover unexpected expenses or emergencies

• To avoid paying taxes

• To save for expansion only