Performance Budgeting vs. Planning-Programming-Budgeting (PPB)

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

To provide flexibility in spending

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

To guide resources into the right usage

To maximize profit

How does budgeting differ between profit-seeking enterprises and governments?

Profit-seeking enterprises face severe penalties for non-compliance with the budget

Government budgets are more flexible than profit-seeking enterprise budgets

Profit-making enterprises rely on legal requirements for budgeting

Government budgets are generally unchangeable once fixed by law (correct)

Why do governments rely on legal requirements to control budget usage?

To guide resources into the right usage

To ensure that money is not used for the appropriate purpose (correct)

To provide flexibility in budgeting

To maximize profits

What are the consequences of altering or exceeding a government budget?

Severe penalties for the administrator Signup and view all the answers

How does the inflexibility of government budgets impact governmental accounting practices?

Requires the accounting system to support the fixed budget Signup and view all the answers

In profit-seeking enterprises, how does budgeting usually differ from governmental budgeting?

Budgeting is more flexible and can be changed easily Signup and view all the answers

What is the main difference between a fixed budget and a flexible budget?

Fixed budgets are for a fixed total dollar amount, while flexible budgets fix the cost per unit of goods and services. Signup and view all the answers

Which type of budget takes the previous year's budget as a base and adjusts it by adding or subtracting a percentage for the current year?

Incremental budget Signup and view all the answers

What is the second major item in the revenue budget?

External assistance Signup and view all the answers

Under which approach to budgeting is the assumption made that historical budget allocations reflected organizational priorities?

Incremental or object of expenditure approach Signup and view all the answers

How is the recurrent budget, which covers current expenditures, primarily financed?

Through taxation Signup and view all the answers

Which type of budget is more appropriate for governmental goods or services according to the text?

Fixed budget Signup and view all the answers

What does the capital budget primarily cover?

Acquisition of newly produced assets Signup and view all the answers

What are budgets prepared by executive and legislative bodies respectively called?

Executive and legislative budgets Signup and view all the answers

Where does the government get most of its funds for the capital budget?

From external borrowing and grants Signup and view all the answers

In which type of funds are flexible budgets more appropriate?

Enterprise and internal service funds Signup and view all the answers

Which type of loans are used for mostly financing capital projects in Ethiopia?

External loans from multilateral and bilateral creditors Signup and view all the answers

What does the annual period over which budgets are prepared called?

Budget cycle Signup and view all the answers

What is the main focus of budgeting on the expenditure side?

All of the above Signup and view all the answers

How are budget structures defined in the context of government finance?

As formats that organize budget data Signup and view all the answers

What does the revenue budget in Ethiopia typically include?

Ordinary revenue, external assistance, and capital revenue Signup and view all the answers

In the context of the revenue budget, what is 'ordinary revenue' composed of?

Both tax and non-tax revenues Signup and view all the answers

Which of the following is NOT a component of tax revenue according to the text?

External assistance Signup and view all the answers

What is a key feature of the classification of budget data mentioned in the text?

Revenue vs Expenditure classification only Signup and view all the answers

What is the main focus of Performance budgeting?

Relating resource inputs to outputs of each organizational unit Signup and view all the answers

In Planning-Programming-budgeting (PPB), what is evaluated after formulating long-range plans?

Ultimate goals and objectives Signup and view all the answers

Why does PPB consider both the Ministry of Health and the Ministry of Education in its evaluation?

To ensure they have complementary programs Signup and view all the answers

What is the purpose of a government budget?

To plan expenditures and revenues for a specified period Signup and view all the answers

When does the fiscal year start in Ethiopia?

Hamle 1 in Ethiopian calendar Signup and view all the answers

How does PPB differ from Performance budgeting?

PPB evaluates specific departmental budgets, while Performance budgeting looks at overall government programs Signup and view all the answers