2.2.4 Flashcards
1
Q
What is a budget?
A
A budget is a financial plan that a business sets on costs and revenue.
2
Q
Why are budgets used?
A
To align businesses targets
3
Q
What is variance analysis?
A
The difference between actual achieved figures and budgeted figures
4
Q
What is favourable variance?
A
When actual achieved figured are better than budgeted.
5
Q
What is adverse variance?
A
When actual achieved figures are worse than budgeted figures.
6
Q
2 Pros of Budgets.
A
Helps underline underperforming areas
Helps motivate workers
7
Q
1 Con of budget
A
If set unrealistically then it will demotivate
8
Q
What is Zero based budgets?
A
Where a business does not set a budget.
9
Q
What are Historical budgets?
A
When business uses data from previous years to set a budget.
