Why is it essential to have a budget in a large company?

Because senior managers can't control, check and authorize all spendings.

enable the business to adapt to unexpected changes in the business.

Which of the following is avoided with a budget?

That a business spends more than it can

What is zero budgeting?

When each holder’s account is set to zero and they need approval to spend

Which main two aspects of a company's activity does a budget consider?

Expected revenue and expenditure

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3.9 BUDGETS (IB Business)

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Quiz on topic 3.9 (budgets) of the "Business & Management" book by Paul Hoang for the Business & Management subject from the IB diploma.

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Questions 19

Answers

1
The money that is set aside for emergency use is called:
contingency fund
crisis savings
revenue funds
cash flow
2
Unexpected expenses don't vary budgets because they are already considered
True
False
3
Variance = actual outcome - previous year's outcome
True
False
4
Budgeting is flexible
False
True
5
The -------- are members of staff who are responsible for the day-to-day management of the budgets they're assigned.
Budget holders
Staff
Administrators
Budget personnel
6
Budgets must always be revised by the government
True
False
7
Why is it essential to have a budget in a large company?
Because directors are too lazy.
Because directors want to control that they receive their full salary.
Because senior managers can't control, check and authorize all spendings.
Because employees of big firms need more motivation than small company ones
8
Budgetary control is important because
Some areas may be overspending
All of the previous answers are correct
Some employees may need more motivation
it helps solving conflict between budget holders
9
Qualitative factors are considered on budgets
True
False
10
Flexible budgets...
plan for the level of output, including forecasts of the costs of stocks
are the ones in which holders have to get approval to spend any money.
plan on the financial costs of bringing materials from overseas
enable the business to adapt to unexpected changes in the business.
11
Budgets are done for four reasons: planning and guidance, coordination, ------ and motivation
check
administration
control
contribution
12
A cost centre doesn't make any profit
True
False
13
Production budgets are...
None is correct
Forecasts on the planned volume of sales and its revenue.
All are correct
The budgets allocated to buy raw materials purchased in other countries
14
Which of the following is avoided with a budget?
That a business spends more than it can
That a business gets external investment during a budget period
That a business asks for an overdraft
Unexpected spendings and problems like a crisis
15
Quality of the output may have a direct relation with the budget
True
False
16
What is zero budgeting?
The moment in which the new year starts and companies haven't spent yet
When a holder is penalized for spending more than it could
When each holder’s account is set to zero and they need approval to spend
When a company has debts and sets its spendings to zero so that it recovers
17
Which main two aspects of a company's activity does a budget consider?
Expected net profit and expenditure
Expected motivation and expenditure
COGS of the previous year and expenditure
Expected revenue and expenditure
18
Adverse variances (or unfavourable variances) exist when the directors resign from their job
False
True
19
The budgets of the competitors are important to create the budget of a company
False
True

3.9 BUDGETS (IB Business) Flashcards | StudBud