Budgets

Question 1

Define budget

Answer 1

A financial plan for the future concerning the revenues and costs of a business

Question 2

Why budget

Answer 2

1. Set targets
2. Turn objectives into practice reality
3. Provide direction
4. Allocating resources
5. Motivate staff
6. Forecast outcomes
7. Control income and expenditure
8. Take control/action

Question 3

What is historical budgeting and one negative

Answer 3

Used great last years figures as a basis for budgeting

Circumstances may have changed

Question 4

What is zero based budgeting and one negative

Answer 4

Budgeted costs and revenue are set to 0. It is based on new proposals for sales and costs

It is time consuming

Question 5

What are the three types of budgeting

Answer 5

1. Revenue(income) budget: expected revenue and sales
2. Cost(expenditure) budget: expected costs
3. Profit budget: based on combined sales and cost budgets