Budgeting: Importance and Purpose

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What is the total income for the month of September?

7500

15000

18000 (correct)

8000

What is the budget status for the month of October?

No budget

Budget surplus

Break even

Budget deficit (correct)

What is the highest total expense among the three months?

November (correct)

September

October

Equal for all three months

What is one of the purposes of establishing a financial goal?

To purchase assets Signup and view all the answers

What is an obstacle that can prevent an individual from achieving their financial goals?

Losing a job Signup and view all the answers

What is the result of subtracting the total expense from the total income for the month of September?

Budget surplus Signup and view all the answers

What percentage of the budget is allocated for Car maintenance?

10% Signup and view all the answers

What is the main purpose of the strategic plan in personal budgeting?

To articulate the vision and mission of the organization Signup and view all the answers

What is the recommended basis for revenue projection in budgeting?

Both historical financial performance and projected growth income Signup and view all the answers

What is the main purpose of fixed cost projection in budgeting?

To predict monthly predictable costs Signup and view all the answers

What percentage of the budget is allocated for Savings?

9% Signup and view all the answers

What is the primary purpose of a personal budget?

To let you and your partner see where the money goes Signup and view all the answers

What is the first step in developing and managing a personal budget?

Strategic plan Signup and view all the answers

What type of expense costs the same amount each month?

Fixed expense Signup and view all the answers

Which of the following is an example of a variable expense?

Buying clothes Signup and view all the answers

What is the definition of income?

The money earned from work, investments, or business Signup and view all the answers

What is the benefit of budgeting in an organization?

It promotes essential principles of communication and coordination Signup and view all the answers

Which of the following is a source of income?

Selling a asset Signup and view all the answers

What is a key principle of budgeting in relation to the people involved in the process?

To ensure that all formally involved in the budgeting process agree to the final budget Signup and view all the answers

What is the purpose of calculating interest and loan repayment in a budget?

To understand the total cost of borrowing money Signup and view all the answers

What is a way to reduce expenses, as mentioned in the text?

Reducing use of utilities such as electricity, gas and water Signup and view all the answers

What does a budget performance result of 'zero' indicate?

The budget and actual expense and income are equal Signup and view all the answers

What is the term for the amount by which the budget is less than the actual income?

Surplus Signup and view all the answers

What is the purpose of comparing actual expense and income with budget expense and income?

To allocate the budget effectively Signup and view all the answers

What is the characteristic of a fixed cost?

It is a minimum expense that needs to be funded in the budget Signup and view all the answers

What type of expenses can be budgeted and are role-led?

Variable costs Signup and view all the answers

Why is it important for not-for-profit organizations to have a targeted profit margin?

To reinvest in facilities and development of the organization Signup and view all the answers

Who should approve the budget and keep current with its performance?

The governing board, president, owner or head of the organization Signup and view all the answers

Why is it important for the owner to review monthly financial statements?

To monitor budget performance Signup and view all the answers

How often should the budget review committee meet to monitor performance against goals?

Monthly Signup and view all the answers