the purpose of budgeting

Question 1

what does the purchase of budgeting show?

Answer 1

the anticipated costs (expenditure) of an enterprise and compare this to expected income from sales revenue

Question 2

what is the expenditure?

Answer 2

the anticipated costs

Question 3

revenue targets:
what does the budget identify?

Answer 3

sales targets and therefore sales revenue

Question 4

revenue targets:
how do you calculate the sales revenue?

Answer 4

sales revenue = number of sales x price

Question 5

revenue targets:
why are sales revenues vital for profits?

Answer 5

so enterprises often set high sales targets for their staff

Question 6

expenditure targets:
what does the budget also set?

Answer 6

spending targets

Question 7

expenditure targets:
what does the spending targets include the total amount of?

Answer 7

allowable expenditures - wages, overheads, raw materials

Question 8

expenditure targets:
how does an enterprise make profit?

Answer 8

revenue must be higher than expenditure

Question 9

a financial planning tool:
why is budgeting another financial planning tool?

Answer 9

helps enterprises to plan for success

Question 10

a financial planning tool:
what does an enterprise set?

Answer 10

sales target

Question 11

a financial planning tool:
what does an enterprise identify and limit?

Answer 11

the expenditure

Question 12

a financial planning tool:
what will an established enterprise use?

Answer 12

last year’s revenue and expenditure figures as a basis to work from

Question 13

a financial planning tool:
what will a new enterprise have to list?

Answer 13

all its possible items of expenditure

Question 14

coping with emergencies:
what will enterprises may have unexpected items of?

Answer 14

expenditure such as shop repair

Question 15

coping with emergencies:
when should contingency fund be used as some money to set aside?

Answer 15

should only be used If there is an emergency