Budgets

Question 1

Budget

Answer 1

a detailed financial plan for the future.

Question 2

Budget holder

Answer 2

individual responsible for the initial setting and achievement of a budget.

Question 3

Variance analysis

Answer 3

calculating differences between budgets and actual performance, and analysing reasons for such differences.

Question 4

Delegated budgets

Answer 4

giving some delegated authority over the setting and achievement of budgets to junior managers.

Question 5

Incremental budgeting

Answer 5

uses last year’s budget as a basis and an adjustment is made for the coming year.

Question 6

Flexible budgeting

Answer 6

cost budgets for each expense are allowed to vary if sales or production vary from budgeted levels.

Question 7

Zero budgeting

Answer 7

setting budgets to zero each year and budget holders have to argue their case to receive any finance.

Question 8

Adverse variance

Answer 8

exists when the difference between the budgeted and actual figure leads to a lower-than-expected profit.

Question 9

Adverse variance

Answer 9

exists when the difference between the budgeted and actual figure leads to a lower-than-expected profit.

Question 10

Favourable variance

Answer 10

exists when the difference between the budgeted and actual figure leads to a higher- than-expected profit.