Key Terms - Theme 2 (Budgets)

Question 1

Budget

Answer 1

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

Question 2

Budgetary control

Answer 2

A business system that involves making future plans, comparing the actual results with the planned results and then investigating the cause of any differences

Question 3

Historical figures

Answer 3

Quantitative figures based on past trading records

Question 4

Production cost budget

Answer 4

A firms planned production costs for a future time period

Question 5

Sales budget

Answer 5

A firms planned sales for a future period of time - can be measured in terms of volume or revenue

Question 6

Variance

Answer 6

The difference between actual financial outcomes and the budgeted financial outcomes

Question 7

Variance analysis

Answer 7

The process of calculating variances and attempting to identify their causes

Question 8

Zero-based budgeting/zero budgeting

Answer 8

A system of budgeting where no money is allocated for costs or spending unless they can be justified by the fund holder (they are given a zero value)