Budgets

Question 1

What is the definition of budgeting?

Answer 1

To allow or provide a particular amount of money in a budget.
To provide (a sum of money) for a particular purpose from a budget.

Question 2

What is the definition of budgeting control?

Answer 2

Is where actual income and spending are compared with planned income and spending, so that you can see if plans are being followed and if those plans need to be changed in order to make a profit.

Question 3

What is the definition of adverse variance? When is adverse variance achieved?

Answer 3

An adverse variance is achieved when the actual performance is worse than the expected results.

Question 4

What is the definition of positive variance?

Answer 4

A favourable budget variance refers to positive variances or gains; an unfavourable budget variance describes negative variance, meaning losses and shortfalls. Budget variances occur because forecasters are unable to predict the future with complete accuracy.