What is the main feature of a zero based budget?

Departments need to get all expenses authorised

Which of the following best describes a profit budget?

target set for the surplus between incomeand expenditure

whats an advantage of using historical figures to set budgets?

Able to adjust year on year, Can be set in line with objectives

What is meant by the term variance?

The difference between actual and budgeted

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AS Business - Budgets Revisited

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Questions 12

Answers

1
What is the main feature of a zero based budget?
Easier to account for in balance sheets
Can be increased if requested
Departments need to get all expenses authorised
2
Which of the following best describes a profit budget?
target set for the surplus between incomeand expenditure
budget of how much a business needs tosell
budget of costs incurred that aren't part of sales process
3
Which of the following best describes budgets?
Spending plan
Business Plan
Financial plan
Spending Review
4
What could businesses do to plug variances in their budgets?
Expand the business into new locations
Change supplier
Motivate staff by offering them higher wages
Increase expenditure on marketing
5
Which budget shows the sales and all the cost of sales incurred?
Profit budget
Expenditure budget
Income budget
6
A variance that is bad for business is known as:
Favourable
Adverse
7
whats an advantage of using historical figures to set budgets?
Easier to control spending
Able to adjust year on year
Are more realistic
Can be set in line with objectives
8
Income budget - Budgeted = £64,449 Actual = £65,954 Variance =
£1,515A
£1,505F
£1,505A
£1,515F
9
What is meant by the term variance?
Actual plus budgeted
The difference between zero based and historical budgets
The difference between actual and budgeted
The difference Income and profit budget budget
10
What are the main disadvantages of budgets?
All of the above
Difficult to estimate costs
Data can be unreliable
Doesn't take into price changes
11
Budgets are set in order to:
Increase profits
Reduces spending
Achieve business objectives
Increase sales
12
What could be possible causes of variances?
State of the economy
Action of competitors
Action of suppliers
All of the above

AS Business - Budgets Revisited Flashcards | StudBud