PMS - MIDTERM

Question 1

“The budget should be balanced, the Treasury should be refilled, public debt should be reduced, the arrogance of officialdom should be tempered and controlled, and the assistance to foreign lands should be curtailed lest Rome become bankrupt.”

Answer 1

Cicero

Question 2

a plan expressed in quantitative terms, on how to acquire and use the resources of an entity during a certain future period of time

Answer 2

BUDGET

Question 3

the process of creating a formal plan and translating goals into a quantitative format.

Answer 3

BUDGETING

Question 4

also called as management or executive committee, is primarily responsible in developing and institutionalizing budgetary systems and processes.

Answer 4

BUDGET COMMITTEE

Question 5

It is usually composed of sales manager, production manager, the chief engineer, and the contractor.

Answer 5

BUDGET COMMITTEE

Question 6

a detailed set of information and guidelines about the budgeting processes.

Answer 6

BUDGET MANUAL

Question 7

BUDGET MANUAL It includes:

Answer 7

 Statements of the budgetary purpose and desired results.
 A listing of specific budgetary activities to be performed.
 Calendar of scheduled budgetary activities.
 Sample budgetary forms.
 Original, revised, and approved budgets.

Question 8

the length of time for which a budget is to be prepared and implemented.

Answer 8

BUDGET PERIOD

Question 9

it represents the overall plan of the organization for a given budget period.

Answer 9

MASTER BUDGET

Question 10

It consists of all the individual budgets for each segment of the organization aggregated or consolidated into one overall budget for the entire firm.

Answer 10

MASTER BUDGET

Question 11

MASTER BUDGET is composed of:

Answer 11

1. Operating Budget
2. Financial Budget
3. Special Budget

Question 12

the budgeted income statement for a certain budget period

Answer 12

Operating Budget

Question 13

the budgeted balance sheet as of the end of a certain period

Answer 13

Financial Budget

Question 14

it includes performance and capital budgets.

Answer 14

Special Budget

Question 15

the activities to be incurred are to be prioritized based on its order of relevance in line with a defined goal in the coming period without regard to past experience or present condition.

Answer 15

ZERO-BASED BUDGETING

Question 16

this budgetary approach emphasizes the decentralization of budgetary decision-making.

Answer 16

SITE-BASED BUDGETING

Question 17

It places local managers and other staff at the center of the budget preparation process, making them responsible for both the preparation and the maintenance of the budget.

Answer 17

SITE-BASED BUDGETING

Question 18

a time framed is maintained (12 mos. or 6 mos.), and when a segment in a budgeted time frame expire and is dropped, a new segment is to be added to maintain the same time frame.

Answer 18

CONTINUOUS (ROLLING) BUDGETING

Question 19

it is done over the entire life span of a product starting from its period of conception, to infancy, to growth, expansion, up to maturity.

Answer 19

LIFE-CYCLE BUDGETING

Question 20

budgets are developed through joint decision-making by top management and operating personnel.

Answer 20

PARTICIPATORY BUDGETING

Question 21

budgets are prepared by top management with little or no input from operating personnel.

Answer 21

IMPOSED BUDGETING

Question 22

costs and expenses are not segregated to fixed and variable components and the budgeted costs, without the adjustments to actual capacity, serves as the basis in evaluating actual performance.

Answer 22

STATIC (FIXED) BUDGETING

Question 23

prepared for different level of activity, costs and expenses are segregated to fixed and variable components giving way to the determination of estimated costs based on actual capacity.

Answer 23

FLEXIBLE BUDGETING

Question 24

expressed in units of materials, number of employees, or number of man hours or service units rather than in pesos.

Answer 24

PHYSICAL BUDGETING

Question 25

identifying responsibility centers where revenues and costs are controlled by a responsible officer.

Answer 25

RESPONSIBILITY BUDGETING

Question 26

it is the practice of linking the allocation of resources to the production outcomes.

Answer 26

OUTCOME-FOCUSED BUDGETING

Question 27

The objective is to allocate government resources to those service providers or programs that use them most effectively.

Answer 27

OUTCOME-FOCUSED BUDGETING

Question 28

it is referred to as the “historical” approach because administrators and chief executives often base their expenditure requests on historical expenditures and revenue data.

Answer 28

LINE-ITEM BUDGETING

Question 29

It also offer flexibility in the amount of control established over the use of resources, depending on the level of expenditure detail (e.g., fund, function, and object) incorporated into the document.

Answer 29

LINE-ITEM BUDGETING

Question 30

in a strict performance budgeting environment, budgeted expenditures are based on a standard cost of inputs multiplied by the number of units of an activity to be provided in that time period. The total budget for an organization is the sum of all the standard unit costs multiplied by the units expected to be provided.

Answer 30

PERFORMANCE BUDGETING

Question 31

Different budgeting systems that base expenditures primarily on programs of work and secondarily, on objects. In contrast to other approach, a full program budget bases expenditures solely on programs of work regardless of objects or organizational units.

Answer 31

PERFORMANCE BUDGETING

Question 32

It is considered as a transitional form between traditional line-item and performance approaches and it may be called

Answer 32

MODIFIED PROGRAM BUDGETING

Question 33

standards are established as a basis of actions and performance; also as a motivational factor.

Answer 33

Standard-setting

Question 34

concrete plans, targets and activities are develop

Answer 34

Planning

Question 35

goals and processes should be effectively communicated and coordinated to encourage participation, involvement, commitment, and ownership of the organizational plans.

Answer 35

Communication & Coordination

Question 36

actions are checked to assess conformity with plans and to make on-line corrections and adjustments.

Answer 36

Monitoring of Activities

Question 37

Results are to be evaluated to determine what happened and make end-of-the line corrections and adjustments. (ex. Feedback, performance, measurement, and variance analysis)

Answer 37

Evaluation of Results

Question 38

nobody can predict what exactly will happen in the future. Hence, future situations may warrant revision or modification of plans.

Answer 38

Accuracy of Estimates

Question 39

it requires cooperation and participation of all the members. If they lose enthusiasm in carrying out the plans, the entire budgetary system will fail.

Answer 39

Adverse Reactions from Employees

Question 40

the development and installation system maybe time consuming.

Answer 40

Amount of Work Involved in Developing a Good Budget

Question 41

some managers think that budget restricts their movement and limit their decision- making power, afraid that such budgets maybe used against them if they fail.

Answer 41

Once the budget is developed, it limits flexibility

Question 42

too costly for some organizations, such that the benefits may be outweighed by its cost.

Answer 42

It is an expensive tool and implementation is not automatic

Question 43

members of the organization are forced to plan on how to acquire and use the firm’s scarce resources. This results into a more efficient and effective utilization of such resources.

Answer 43

Compels Management Planning

Question 44

actual results of operations are compared with the budgeted figures to monitor the organization’s or the organizational segment’s performance.

Answer 44

Provides a Good Framework for Judging Subsequent Performance

Question 45

members of the different organizational segments are enabled to exchange their ideas and objectives thereby giving them an opportunity to communicate with each other.

Answer 45

Promotes communication, coordination, and control

Question 46

knowing that these budgets are to be used as one of the bases for performance evaluation, the different unit managers will try to operate within this framework and should they be successful the result is attainment of the company’s goal according to plans.

Answer 46

Motivates members of the organization

Question 47

"A budget tells us what we can't afford, but it doesn't keep us from buying it."

Answer 47

William Feather