Which of the following is the primary purpose of budgeting?
a) To increase sales revenue
b) To plan and control financial resources
c) To maximize profits
d) To track customer behavior
A budget that remains fixed irrespective of changes in business activity levels is called?
a) Flexible Budget
b) Fixed Budget
c) Zero-Based Budget
d) Rolling Budget
Which type of budget adjusts based on activity levels?
a) Fixed Budget
b) Flexible Budget
c) Cash Budget
d) Capital Budget
Which of the following budgets estimates cash inflows and outflows?
a) Capital Budget
b) Sales Budget
c) Cash Budget
d) Production Budget
What is the first step in the budgeting process?
a) Preparing the cash budget
b) Setting business objectives
c) Forecasting sales
d) Estimating production costs
Which budget is used for long-term investment planning?
a) Cash Budget
b) Capital Budget
c) Sales Budget
d) Production Budget
Which budget focuses on expected revenue?
a) Sales Budget
b) Cash Budget
c) Production Budget
d) Master Budget
What does budgetary control involve?
a) Preparing a budget only
b) Monitoring and comparing actual vs. budgeted performance
c) Increasing costs
d) Reducing employee salaries
Which budget includes all other functional budgets?
a) Capital Budget
b) Master Budget
c) Sales Budget
d) Cash Budget
Zero-Based Budgeting (ZBB) requires:
a) Justifying only new expenses
b) Justifying all expenses from zero
c) Adjusting last year’s budget
d) Using a fixed budget approach
Which of the following is a limitation of budgeting?
a) Provides a clear direction
b) Encourages efficiency
c) Requires estimates that may be inaccurate
d) Eliminates financial risks
A rolling budget is also known as a:
a) Static Budget
b) Continuous Budget
c) Flexible Budget
d) Cash Budget
Which budget estimates production costs?
a) Cash Budget
b) Sales Budget
c) Production Budget
d) Capital Budget
Which budget helps in determining raw material requirements?
a) Sales Budget
b) Material Budget
c) Cash Budget
d) Master Budget
What is variance analysis?
a) Comparing actual and budgeted performance
b) Increasing budgeted expenses
c) Reducing production costs
d) Expanding business operations
Which budget is used to plan workforce requirements?
a) Sales Budget
b) Labor Budget
c) Cash Budget
d) Capital Budget
Which of the following is NOT a characteristic of good budgeting?
a) Based on realistic assumptions
b) Covers all activities
c) Ignores future trends
d) Allows flexibility
Which budget focuses on non-financial aspects like employee performance?
a) Performance Budget
b) Cash Budget
c) Capital Budget
d) Master Budget
What is the key advantage of a flexible budget?
a) It remains unchanged
b) It adjusts to activity levels
c) It ignores costs
d) It is simpler to prepare
A budget prepared for a single activity level is called?
a) Flexible Budget
b) Fixed Budget
c) Zero-Based Budget
d) Rolling Budget
Which budget is used for estimating profit and loss?
a) Cash Budget
b) Capital Budget
c) Budgeted Income Statement
d) Production Budget
Budgetary slack refers to:
a) Setting high performance targets
b) Deliberately underestimating revenue or overestimating costs
c) Preparing a detailed budget
d) Using a flexible budget
The process of revising budgets periodically is called:
a) Rolling Budgeting
b) Zero-Based Budgeting
c) Capital Budgeting
d) Flexible Budgeting
A functional budget is:
a) A budget that includes all departments
b) A budget for a specific department or function
c) The same as a master budget
d) Not used in budgeting
Which budget focuses on capital expenditures?
a) Master Budget
b) Cash Budget
c) Capital Budget
d) Flexible Budget
What does a budgeted balance sheet show?
a) Estimated financial position at a future date
b) Actual financial position
c) Only cash flow projections
d) Only revenue estimates
Which budget is most useful for short-term planning?
a) Master Budget
b) Capital Budget
c) Cash Budget
d) Production Budget
Budgetary control helps in:
a) Increasing expenses
b) Evaluating financial performance
c) Avoiding budget preparation
d) Eliminating financial planning
Who is responsible for preparing budgets in a company?
a) Sales team
b) Budget Committee
c) Employees
d) Customers
