key words - page 1

Question 1

Budget

Answer 1

Is a target or revenue that a firm or department must aim to reach over a given period of time.
In other words it is a quantitative economic plan prepared and agreed in advance.

Question 2

Budgetary Control/Budgeting

Answer 2

This is a business system which involves making future plans, comparing the actual results with the planned results and investigating any difference/variances.

Question 3

Income/Sales Revenue

Answer 3

Shows the planned income or revenue for a period of time.

Question 4

Expenditure/Total Cost Budget

Answer 4

Shows how much money a business is expected to spend for a period of time.

Question 5

Profit Budget

Answer 5

Shows the amount of profit a business is expected to make over a period of time.

Question 6

Master Budget

Answer 6

A summery statement which brings together information from budgets.

Question 7

Resentment

Answer 7

Can cause rivalry between departments if they have to compete for money.

Question 8

Restrictive

Answer 8

Fixed budgets can stop firms responding to changing market conditions.

Question 9

Time-Consuming

Answer 9

Managers can get too preoccupied with setting and reviewing budgets, and forget to focus on the real business issues.

Question 10

Variance

Answer 10

Is the amount by which the actual result differs from the budgeted figure - it can be either favourable or adverse.