Busget

Question 1

3 difficulties of budget

Answer 1

Time consuming: developing detailed budget requires a significant amount of effort and time which can be a burden(hard) for the businesses.

Assumptions: budgets are often based on assumptions that may not be reliable leading to inaccuracies.

Economic conditions: budgets quickly can become outdated, due to economic fluctuations(up and down) making it hard to stick to financial plans. = keep it updated, up to date and reviewing and adjust to reflect current economic conditions
.

Question 2

2 purpose of budget

Answer 2

Planning: budget helps businesses by setting financial targets for income and expenses. Thus helps the business to prepare for unexpected changes. = thus helps business predict how much money will come in and out, which is important for making informed decisions. Having a clear plan helps then business be ready for unexpected changes events in the market.

Control: by setting financial limits, budget help in controlling costs and preventing overspending. This helps prevent unnecessary costs and keeps the business on track

Question 3

What are the 2 purposes of budget?

Answer 3

1. Planning: budget helps businesses by setting financial targets for income and expenses. this helps business prepare for unexpected changes.= this helps predict how much money will come in/out. Which is important for making informed decisions.

Control: by setting a financial limit. Budget helps in controlling costs and preventing overspending. = this helps the business on track to achieve its financial goals.

Question 4

What is meant by zero based budgets? (ZBB)

Answer 4

ZBB is a method where all expenses are justified and approved for each new period of time. Its not like traditional budget where you adjust previous budget, zero based budget is when you start from scratch. Every expenses is required to be justified and approved ensuring funds are allocated to necessary activities and projects to be efficient used of resources and cost saving mesures

Question 5

What is meant by historical budget?

Answer 5

Historical budget is a financial plan that uses data and performances from the past, to set realistic financial plans for the future. By analysing past income and expenses businesses can make informed(knowledge) predictions and adjustments for factors such as inflation and market trends. = this helps in creating accurate plans and ensuring resource allocation(shared to useful).

Question 6

Whats adverse and favourable variance?

Answer 6

Favourable variance= occurs when the actual sales are better then what has been budgeted.

Adverse variance= occurs when the actual sales are worse then what has been budgeted

Question 7

What are 2 break even analysis that is useful for

Answer 7

1. Decision making: break even analysis helps businesses understand the point at which they will start making profit. Its crucial(important) tool for decision making specially when considering new project or expansion.
2. By identifying fc and vc students can learn to manage and control expenses effectively. This knowledge is essential(necessary ) for business planning and budgeting.