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 4 of 6

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Q31.
How often is the performance reviewed in the budgetary control system?

a.

Monthly

b.

Quarterly, half-yearly, and annually

c.

Annually only

d.

Weekly

Discuss
Answer: (b).Quarterly, half-yearly, and annually Explanation:The performance is periodically reviewed, including quarterly, half-yearly, and annually.
Q32.
In addition to yearly budgets, for which other periods are budgets prepared?

a.

Only quarterly

b.

Only half-yearly

c.

Only for specific events

d.

Half year, and quarter

Discuss
Answer: (d).Half year, and quarter Explanation:Budgets are prepared not only for a period of a year but also for the period of half a year and quarter.
Q33.
What factors are taken into account while preparing budgets in insurance companies?

a.

Only internal factors

b.

Only economic factors

c.

Only environmental factors

d.

Environmental factors like competition and economic situation

Discuss
Answer: (d).Environmental factors like competition and economic situation Explanation:While preparing budgets, environmental factors like competition and economic situation are taken into account.
Q34.
What is the purpose of the periodical review of the budget in insurance companies?

a.

To ignore the corrective actions

b.

To determine final results without any review

c.

To fix responsibility for variances

d.

To avoid the analysis of revenue and results

Discuss
Answer: (c).To fix responsibility for variances Explanation:Periodical review of the budget in insurance companies aims to determine corrective actions and fix responsibility for variances.
Q35.
Why is budgetary control considered essential for insurance companies?

a.

To complicate the organizational objectives

b.

To avoid regulatory compliance

c.

To make it difficult to reach organizational objectives

d.

To reach organizational objectives of growth, survival, profitability, solvency, and regulatory compliance

Discuss
Answer: (d).To reach organizational objectives of growth, survival, profitability, solvency, and regulatory compliance Explanation:Without budgetary control, insurance companies find it very difficult to reach organizational objectives of growth, survival, profitability, solvency, and regulatory compliance.
Q36.
What is the purpose of adopting a budgetary control mechanism in insurance companies?

a.

To eliminate the need for variances

b.

To avoid periodic review

c.

To determine and analyze variances

d.

To disregard business philosophy and policy

Discuss
Answer: (c).To determine and analyze variances Explanation:With the adoption of a budgetary control mechanism, variances are determined and analyzed to fix responsibility and take corrective actions after periodic review.
Q37.
What is the first step towards the introduction and implementation of a budgetary control system?

a.

Formation of budget center

b.

Formation of budget committee

c.

Formation of organization chart

d.

Delegation of authority

Discuss
Answer: (c).Formation of organization chart Explanation:A well-defined organization chart is the first step towards the introduction and implementation of a budgetary control system.
Q38.
What does an organization chart define?

a.

Only functional responsibility

b.

Only delegation of authority

c.

Only reporting system

d.

Functional relationship, delegation of authority and responsibility, and reporting system

Discuss
Answer: (d).Functional relationship, delegation of authority and responsibility, and reporting system Explanation:An organization chart is a statement defining functional relationship, delegation of authority and responsibility, and reporting system of executives and employees responsible for the accomplishment of organizational goals and objectives.
Q39.
What does a budget center encompass in an insurance company?

a.

Only cost centers

b.

Only regional offices

c.

Several cost centers functioning with responsibilities to achieve targeted revenue collection, maintain work within targeted costs, and make target profit

d.

Only branch offices

Discuss
Answer: (c).Several cost centers functioning with responsibilities to achieve targeted revenue collection, maintain work within targeted costs, and make target profit Explanation:A budget center may encompass several cost centers functioning with responsibilities to achieve the targeted revenue collection, maintain work within targeted costs, and make target profit during the budget period.
Q40.
Who generally consists of a budget committee?

a.

Only junior members of the organization

b.

Only departmental heads

c.

Only senior members of the organization

d.

Only corporate executives

Discuss
Answer: (c).Only senior members of the organization Explanation:A budget committee generally consists of senior members of the organization, such as departmental heads and corporate executives.
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