Accounting And Finance- Budgets And Variances

Question 1

What is a budget

Answer 1

A financial plan for a derivative period of time

Question 2

What is a variance

Answer 2

The difference between the budget and the actual amount spent

Question 3

Impact of budgets and variance on a business

Answer 3

Allows the business to see how the budget matches with the variance in order to see if the right level of budget is set and if adverse where the business could cut costs

Question 4

Analyse favourable and adverse budgets

Answer 4

deficit where expenditure exceeds the available income. A favourable variance is where actual income is more than budget, or actual expenditure is less than budget.