Budget and Budgetary Control MCQs

Welcome to our comprehensive collection of Multiple Choice Questions (MCQs) on Budget and Budgetary Control, a fundamental topic in the field of IC 89 Management Accounting. Whether you're preparing for competitive exams, honing your problem-solving skills, or simply looking to enhance your abilities in this field, our Budget and Budgetary Control MCQs are designed to help you grasp the core concepts and excel in solving problems.

In this section, you'll find a wide range of Budget and Budgetary Control mcq questions that explore various aspects of Budget and Budgetary Control problems. Each MCQ is crafted to challenge your understanding of Budget and Budgetary Control principles, enabling you to refine your problem-solving techniques. Whether you're a student aiming to ace IC 89 Management Accounting tests, a job seeker preparing for interviews, or someone simply interested in sharpening their skills, our Budget and Budgetary Control MCQs are your pathway to success in mastering this essential IC 89 Management Accounting topic.

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Budget and Budgetary Control MCQs | Page 1 of 6

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Q1.
What is the primary aim of budgetary control?

a.

Minimization of income and wealth

b.

Effective planning and control of income and expenditure

c.

Random allocation of resources

d.

Lack of direction and control

Discuss
Answer: (b).Effective planning and control of income and expenditure Explanation:Budgetary control aims at effective planning and control of income and expenditure to maximize the income and wealth of an organisation.
Q2.
What is the definition of budgeting?

a.

A random financial plan

b.

A systematic plan for the utilization of resources

c.

A plan without targets

d.

A plan without control over future operations

Discuss
Answer: (b).A systematic plan for the utilization of resources Explanation:Budgeting is described as a plan and process for designing, implementing, and operating on targets and controlling variances to complete the targets.
Q3.
Why are budgets and budgetary control important?

a.

Only for business organizations

b.

Only for governments

c.

Only for individuals

d.

For all organizations, governments, and individuals

Discuss
Answer: (d).For all organizations, governments, and individuals Explanation:Budgets and budgetary control are important not only for business organizations but for all organizations, governments, and individuals.
Q4.
In the context of government budgets, what information is provided in the annual budget proposal?

a.

Only estimated revenues

b.

Only planned expenditures

c.

Both estimated revenues and costs

d.

Only sources of revenues

Discuss
Answer: (c).Both estimated revenues and costs Explanation:Government budgets provide information such as estimated revenues, sources of revenues, allocation of revenues, estimates of expenditures (both planned and non-planned), budget deficit, and management of budget deficit.
Q5.
What is a common practice among countries and organizations worldwide, irrespective of their development status?

a.

Developing budget estimates

b.

Ignoring budget plans

c.

Avoiding periodic reviews

d.

Disregarding corporate goals

Discuss
Answer: (a).Developing budget estimates Explanation:All countries and organizations, regardless of their development status, prepare budget estimates and implement budget plans.
Q6.
What are essential features of budgets?

a.

Prepared after the commencement of the budget period

b.

Not approved by corporate management

c.

Prepared only in physical units

d.

Used for periodical review of actual performance

Discuss
Answer: (d).Used for periodical review of actual performance Explanation:There are many essential features of budgets, and one of them is that it is used for the periodical review of actual performance and finding out variances.
Q7.
What is the main difference between a budget and a forecast?

a.

Forecasting is a commitment statement, while budgeting is not.

b.

Budgeting is a preliminary step for forecasting.

c.

Forecasts are financial policies, plans, or commitments.

d.

Budgets are commitment statements prepared based on forecasts.

Discuss
Answer: (d).Budgets are commitment statements prepared based on forecasts. Explanation:A budget is a commitment statement prepared to attain corporate targets based on the forecasts made.
Q8.
When do budgets begin in relation to forecasting?

a.

Before forecasting

b.

Simultaneously with forecasting

c.

After forecasting

d.

Independent of forecasting

Discuss
Answer: (c).After forecasting Explanation:Budgets begin when forecasting ends, indicating that forecasting is a preliminary step for budgeting.
Q9.
How does the scope of forecasts differ from budgets?

a.

Forecasts have a limited scope with a financial plan.

b.

Budgets have a wide scope without any commitment.

c.

Forecasts have wide scope and use without commitment.

d.

Budgets have a limited scope without any financial plan.

Discuss
Answer: (c).Forecasts have wide scope and use without commitment. Explanation:Forecasts have a wide scope and use in financial or non-financial terms without any commitment or plan to achieve, while budgets have a limited scope with a financial plan to be achieved or commitment to be done in a specific period.
Q10.
What is the definition of Budgetary Control, according to the Institute of Cost and Management Accountants (CIMA)?

a.

The preparation of budget estimates

b.

The establishment of budgets with no relation to policy

c.

The continuous comparison of actual with budgeted results

d.

The comparison of budgetary objectives with corporate goals

Discuss
Answer: (c).The continuous comparison of actual with budgeted results Explanation:Budgetary Control, as defined by CIMA, involves the continuous comparison of actual with budgeted results to secure the objectives of a policy.
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