Budgeting Flashcards
What is the definition of a budget
A budget is a plan for the future . It is an estimate of planned expenditure (costs) and predicted revenue (sales)
What is the definition of an expenditure budgets
It predicts how much money a business will spend over a period of time
How can an expenditure budget be useful
It can set limits in spending to ensure the business is not overspending
What is the definition of a revenue budget
It predicts how much money will come into a business from sales over a period of time
What is budgetary control
A budgetary control compares budgeted figures with actual figures
What does a business calculate when they compare budgeted and actual figures
The variance
What does the term “adverse mean “
Worse than expected
What does the term “favourable “ mean
Better than expected
On an expenditure budget if the actual cost is higher than the budgeted costs would there be an adverse of favourable variance
Adverse !!
On a revenue budgets if the actual revenue is higher than the budgeted revenue would there be an adverse of favourable variance
Favourable
What are the advantages of a budgetary control
It lets a business monitor its budgets and check it against the plan
It can see if the costs are being kept to
It can help a business work out why there is a variance
