Budgeting Key Terms

Question 1

Budget

Answer 1

A quantitative economic plan prepared and agreed in advance

Question 2

Budgetary control

Answer 2

A business system that involves making future plans, comparing the actual results with the planned results and then investigating the cause of any differences

Question 3

Historical figures

Answer 3

Quantitative information based on post trading records

Question 4

Production cost budget

Answer 4

A firms planned production costs for a future period of time

Question 5

Sales budget

Answer 5

A firm’s planned sales for future period of time – can be measured in terms of volume or revenue

Question 6

Variance

Answer 6

The difference between actual financial outcomes and those budgeted

Question 7

Variance analysis

Answer 7

The process of calculating variances and attempting to identify their causes

Question 8

Zero-based budgeting zero budgeting

Answer 8

A system of budgeting where no money is allocated for costs or spending unless they can be justified by the fund holder (given a zero value)