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 2 of 6

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Q11.
How does a budgetary control system contribute to successful business performance and profitability?

a.

By disregarding budget limits

b.

By avoiding the comparison of actual results with budget standards

c.

By fixing responsibility for failure to reach targets

d.

By establishing budgets with budget limits on various parameters

Discuss
Answer: (d).By establishing budgets with budget limits on various parameters Explanation:A budgetary control system contributes to successful business performance by establishing budgets with budget limits on various parameters.
Q12.
How does a budgetary control system contribute to managerial decision-making?

a.

By being rigid and unbending

b.

By avoiding decentralization of authority and responsibility

c.

By bringing a control system for informed managerial decision

d.

By disregarding corporate objectives

Discuss
Answer: (c).By bringing a control system for informed managerial decision Explanation:A well-designed budgetary control system brings a control system for informed managerial decision for corporate growth and profitability.
Q13.
How should a budgetary control system be perceived?

a.

As something rigid and unbending

b.

As a static and unchanging system

c.

As a dynamic and continuous review and revision system

d.

As a system without variance analysis

Discuss
Answer: (c).As a dynamic and continuous review and revision system Explanation:A budgetary control system should be perceived as dynamic and continuous, involving regular review and revision based on careful variance analysis.
Q14.
What is one of the objectives of the Budgetary Control System?

a.

To avoid decentralization

b.

To enable improper allocation of resources

c.

To reduce transparency

d.

To ensure highest degree of communication, co-ordination, and control

Discuss
Answer: (d).To ensure highest degree of communication, co-ordination, and control Explanation:One of the objectives as ensuring the highest degree of communication, co-ordination, and control.
Q15.
Why is proper and judicious allocation of limited resources important in the context of the Budgetary Control System?

a.

To maximize losses and wastage

b.

To minimize income and wealth

c.

To ensure maximization of income and wealth

d.

To discourage decentralization

Discuss
Answer: (c).To ensure maximization of income and wealth Explanation:Proper and judicious allocation of limited resources ensures maximization of income and wealth.
Q16.
What does the Budgetary Control System compel management to do regarding the future of the organization?

a.

To ignore the future

b.

To avoid detailed plans

c.

To think about the future and set out detailed plans

d.

To disregard the organization's purpose and direction

Discuss
Answer: (c).To think about the future and set out detailed plans Explanation:The Budgetary Control System compels management to look ahead, set out detailed plans, and give the organization purpose and direction.
Q17.
What is the purpose of providing control by comparisons of actual results against budget plans?

a.

To ignore the reasons for deviation

b.

To avoid remedial action

c.

To investigate the reasons and causes for deviation

d.

To discourage performance appraisal

Discuss
Answer: (c).To investigate the reasons and causes for deviation Explanation:Providing control by comparisons of actual results against budget plans is done to investigate the reasons and causes for deviation.
Q18.
How does the Budgetary Control System motivate employees?

a.

By discouraging employee participation in setting budgets

b.

By appreciating poor performance

c.

By avoiding employee participation in setting budgets

d.

By participating in the setting of budgets and appreciating good performance

Discuss
Answer: (d).By participating in the setting of budgets and appreciating good performance Explanation:The Budgetary Control System motivates employees by participating in the setting of budgets and appreciating good performance.
Q19.
What is one of the limitations regarding the adequacy of the Budgetary Control System?

a.

It starts with the preparation of budget estimates

b.

It depends on the accuracy of estimates

c.

It adapts easily to changing market dynamics

d.

It is a routine and customary affair

Discuss
Answer: (b).It depends on the accuracy of estimates Explanation:The adequacy of the Budgetary Control System depends on the adequacy or accuracy of estimates.
Q20.
Why is it difficult to make all budget plans accommodate and adapt to changes in business conditions and environments?

a.

Budgets are flexible and easily adaptable

b.

Budgets are not affected by market dynamics

c.

Business conditions and environments are constantly changing

d.

Budgets are not influenced by changes in economic policy

Discuss
Answer: (c).Business conditions and environments are constantly changing Explanation:Business conditions and environments constantly change, making it difficult to make all budget plans accommodate and adapt to these changes.
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