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Monitoring and Maintaining Expenditure: Budgeting and Classification Quiz

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Monitoring and Maintaining Expenditure: Budgeting and Classification Quiz

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Questions and Answers

What is the primary purpose of budgeting in the context of budgetary control?

To communicate information within a firm

To serve as a tool for management control (correct)

To establish and maintain coordination

To measure success of the business

Which statement best describes the main feature of budgetary control?

Setting budgets without any comparison to actual performance

Establishing budgets based on past performance

Revision of budget only when there are significant changes

Taking corrective actions based on actual performance vs. budget (correct)

In what way does budgeting contribute to the planning function of management?

By encouraging managers to complete tasks in line with business objectives

By serving as a pivot for management control

By communicating information within the firm

By designing a desired future position for the entity (correct)

Which component is NOT typically part of a master budget for a non-manufacturing company?

Statement of retained earnings budget Signup and view all the answers

What is the basis for comparison in budgetary control to analyze variations in performance?

Comparison of actual vs. budgeted performance Signup and view all the answers

What is a characteristic of a budget according to the provided text?

Connected to a definite future period Signup and view all the answers

Which type of budget is generally for one or two years according to the text?

Short-term budget Signup and view all the answers

What is the focus of operating budgets in a firm as per the information provided?

Different activities or operations of a firm Signup and view all the answers

Which type of budget is concerned with cash receipts and disbursements, working capital, and financial position?

Financial budget Signup and view all the answers

When is a budget to be approved according to the text?

Before the actual operation Signup and view all the answers