Bugeting

Question 1

What are the different types of budget?

Answer 1

Expenditure budget
Income budget
Profit budget

Question 2

What is an expenditure budget?

Answer 2

A plan for how much you want to spend (maximum target)

Question 3

What is an income budget?

Answer 3

Minimum target for the desired revenue level over a period of time

Question 4

What is a profit budget?

Answer 4

It combines the previous two budgets

Question 5

What is a variance analysis?

Answer 5

The difference between what you planned to spend and what you actually spend

Question 6

List the advantages of a budget

Answer 6

It will set a limit on spending which must be adhered to
It will help prioritise spending
It will help plan ahead and makes sound business decisions
At the end of the year the business can compare their actual spending/revenue against the planned budget and identify areas that may need to be looked at

Question 7

What is budgeting?

Answer 7

A financial plan prepared and approved for a defined period of time

Question 8

Describe a sales budget

Answer 8

Shows expected sales and the amount of money the business can expect to receive from those sales