budgeting Flashcards
1
Q
definition of budgeting?
A
are forecasts or plans for the future finances of a business both whole or a specific function.
2
Q
what are the 3 types of budgeting?
A
- income
- expenditure
- profit
3
Q
what information can be used to inform your budget?
list the 3
A
- historical data
- market research
- own expenditure/knowledge
4
Q
definition of variance?
A
It is the difference between the actual income, expenditure or profit, and the figure that has been budgeted.
5
Q
what are the different types of budgeting in a biz?
list 2
A
adverse and favourable
6
Q
what is adverse?
list 3
A
- bad for the biz
- lower than budget
- profit lower than budget
7
Q
what is favourable?
list 4
A
- good for the biz
- expenditure lower than budget
- income higher than budget
- profit higher than budget
8
Q
what are the advantages for budgeting?
list 3
A
- provides a quantifiable target against which actual outcomes can be measured.
- informs decision-making.
- motivates budget holders due to increase responsibility
9
Q
what are the disadvantages of budgeting?
list 3
A
- maybe too easy or hard to achieve demotivating
- maybe restrictive
- time-consuming to set + monitor
