Budget Classifications Quiz

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What is the primary purpose of a budget in governmental accounting?

To plan for future expenditures (correct)

To distribute profit among shareholders

To determine the market value of the government entity

To track actual expenses

How does the flexibility of budgeting in profit-seeking enterprises differ from that in governmental accounting?

Governmental budgets are usually flexible throughout the year.

Profit-seeking enterprises have fixed budgets by law.

Governmental budgets can be altered without any penalties.

Profit-seeking enterprises can easily change budgets based on profit forecasts. (correct)

Why do governments rely on legal requirements to ensure budget compliance?

To maximize profits for shareholders

To ensure money is used for the appropriate purpose (correct)

To allow flexibility in budgeting decisions

To encourage administrators to exceed the budget

What role does the accounting system play in supporting government budgets according to the text?

Ensuring that money is used for the appropriate purpose Signup and view all the answers

What are the consequences for administrators who alter or exceed a government budget according to the text?

Severe penalties for non-compliance Signup and view all the answers

How do government budgets differ from profit-seeking enterprise budgets in terms of changeability?

Government budgets are unchangeable once fixed by law. Signup and view all the answers

What is the primary purpose of a budget?

Controlling assigned resources Signup and view all the answers

What distinguishes capital budgets from current budgets?

Acquisition of fixed assets Signup and view all the answers

In budget classifications, what is the main difference between a tentative and an enacted budget?

Tentative budget is not officially approved; enacted budget is a legal document Signup and view all the answers

How are general and special budgets differentiated?

General budgets include all funds; special budgets exclude some funds Signup and view all the answers

What is the key advantage of planning for acquisitions several years in advance?

Wise management of resources Signup and view all the answers

Why are current budgets sometimes referred to as recurring expenditures?

Similar expenditures needed year after year Signup and view all the answers

What is the first step in the typical budget cycle described in the text?

Preparation of the macro-economic framework Signup and view all the answers

Which stage involves the determination of the expenditure budget ceiling?

Budget call and ceiling Signup and view all the answers

What is the last stage in the typical budget cycle process described in the text?

Allotment Signup and view all the answers

Between which entities does the stage 'allocation of expenditure budget between Federal and Regional governments' occur?

Federal and Regional governments Signup and view all the answers

Which stage involves the official submission of the budget to the Council of Peoples‟ Representatives?

Notification and publication of the budget Signup and view all the answers

What is the primary usefulness of FP budgets according to the text?

Maximizing profit Signup and view all the answers

Why do government administrators often overlook the planning aspects of a budget?

Prioritizing control over planning Signup and view all the answers

According to the GASB, what is one of the principles related to the budget process?

Inclusion of budgetary comparisons in financial statements Signup and view all the answers

What are the major components of a budget, as mentioned in the text?

Estimated revenues and actual expenditures Signup and view all the answers

Which question summarizes the process of budgeting as presented in the text?

Why will we spend it? Signup and view all the answers

What is the process of allocating scarce resources to unlimited demands known as, as mentioned in the text?

'Budgeting' Signup and view all the answers

What is the main difference between incremental budgeting and zero-based budgeting?

Incremental budgeting allocates resources based on previous period budgets, while ZBB requires each program to justify its existence every year. Signup and view all the answers

Which of the following is a drawback of incremental budgeting?

It may result in unnecessary expenditure built into the budget. Signup and view all the answers

What is the primary idea behind Zero-Based Budgeting (ZBB)?

Each program must justify its existence every year. Signup and view all the answers

Why is incremental budgeting likely to lead to inefficient resource allocation?

It perpetuates existing practices and may result in unnecessary expenditure. Signup and view all the answers

How does Zero-Based Budgeting (ZBB) ensure continual evaluation of programs and services?

By requiring each program to justify its existence annually. Signup and view all the answers

Which statement best describes the approach of incremental budgeting?

Adjusts previous period budgets without justifying program existence annually. Signup and view all the answers

Budget Classifications Quiz

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Questions and Answers

What is the primary purpose of a budget in governmental accounting?

How does the flexibility of budgeting in profit-seeking enterprises differ from that in governmental accounting?

Why do governments rely on legal requirements to ensure budget compliance?

What role does the accounting system play in supporting government budgets according to the text?

What are the consequences for administrators who alter or exceed a government budget according to the text?

How do government budgets differ from profit-seeking enterprise budgets in terms of changeability?

What is the primary purpose of a budget?

What distinguishes capital budgets from current budgets?

In budget classifications, what is the main difference between a tentative and an enacted budget?

How are general and special budgets differentiated?

What is the key advantage of planning for acquisitions several years in advance?

Why are current budgets sometimes referred to as recurring expenditures?

What is the first step in the typical budget cycle described in the text?

Which stage involves the determination of the expenditure budget ceiling?

What is the last stage in the typical budget cycle process described in the text?

Between which entities does the stage 'allocation of expenditure budget between Federal and Regional governments' occur?

Which stage involves the official submission of the budget to the Council of Peoples‟ Representatives?

What is the primary usefulness of FP budgets according to the text?

Why do government administrators often overlook the planning aspects of a budget?

According to the GASB, what is one of the principles related to the budget process?

What are the major components of a budget, as mentioned in the text?

Which question summarizes the process of budgeting as presented in the text?

What is the process of allocating scarce resources to unlimited demands known as, as mentioned in the text?

What is the main difference between incremental budgeting and zero-based budgeting?

Which of the following is a drawback of incremental budgeting?

What is the primary idea behind Zero-Based Budgeting (ZBB)?

Why is incremental budgeting likely to lead to inefficient resource allocation?

How does Zero-Based Budgeting (ZBB) ensure continual evaluation of programs and services?

Which statement best describes the approach of incremental budgeting?

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