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.

Note: Each of the following question comes with multiple answer choices. Select the most appropriate option and test your understanding of Budget and Budgetary Control. You can click on an option to test your knowledge before viewing the solution for a MCQ. Happy learning!

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Budget and Budgetary Control MCQs | Page 6 of 6

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Q51.
What is the definition of a budget?

a.

Only a plan for controlling variances

b.

Only a statement showing allocation of financial resources

c.

Only a process of designing and implementing targets

d.

A precise financial plan providing estimated revenues and costs and a basis for control over future operations.

Discuss
Answer: (d).A precise financial plan providing estimated revenues and costs and a basis for control over future operations. Explanation:A budget is defined as a precise financial plan providing estimated revenues and costs and a basis for control over future operations.
Q52.
When do budgets begin?

a.

When forecasting begins

b.

When budgeting ends

c.

Only when actual results are compared with budgets

d.

Budgets begin when forecasting ends.

Discuss
Answer: (d).Budgets begin when forecasting ends. Explanation:Budgets begin when forecasting ends.
Q53.
What is the role of a budget centre?

a.

Only to achieve targeted revenue collection

b.

Only to maintain work within targeted costs

c.

Only to make a target profit

d.

A budget centre encompasses several cost centers functioning with responsibilities to achieve targeted revenue collection, maintain work within targeted costs, and make a target profit during the budget period.

Discuss
Answer: (d).A budget centre encompasses several cost centers functioning with responsibilities to achieve targeted revenue collection, maintain work within targeted costs, and make a target profit during the budget period. Explanation:The role of a budget centre is encompassing several cost centers with specific responsibilities.
Q54.
What is the purpose of a Budget Manual?

a.

Only to specify roles and responsibilities

b.

Only to provide forms and formats

c.

Only to detail procedures for preparation

d.

To specify roles and responsibilities, provide forms and formats, and detail procedures for preparation and use of budgets.

Discuss
Answer: (d).To specify roles and responsibilities, provide forms and formats, and detail procedures for preparation and use of budgets. Explanation:A Budget Manual specifies roles and responsibilities, provides forms and formats, and details procedures for the preparation and use of budgets.
Q55.
________________ is a precise financial plan providing estimated revenues and costs and basis for control over future operations.

a.

Budget

b.

Estimation

c.

Prediction

d.

Forecast

Discuss
Answer: (a).Budget Explanation:The statement in the question defines a budget as a precise financial plan providing estimated revenues and costs and a basis for control over future operations. Budgets are formal documents that outline the expected financial performance of an organization and serve as a guide for financial planning and control. Estimation, prediction, and forecasting are related concepts but do not capture the comprehensive nature of a budget as described in the statement.
Q56.
________________enables laying down targets and standard in monetary and quantitative terms, what exactly has to be performed by various budget centre or profit centre.

a.

Forecast system

b.

Organisational system

c.

Budgetary control system

d.

Decentralisation system

Discuss
Answer: (c).Budgetary control system Explanation:The statement describes a system that enables laying down targets and standards in monetary and quantitative terms for various budget centers or profit centers. This aligns with the characteristics of a budgetary control system, which involves setting specific targets, comparing actual performance against these targets, and taking corrective actions to achieve organizational objectives. The other options, such as the forecast system, organizational system, and decentralization system, do not specifically address the laying down of targets and standards as described in the statement.
Q57.
In an insurance company, which of the following wilt be considered as 'budget centre'?

a.

Branch office

b.

Divisional office

c.

Regional office

d.

All of the above

Discuss
Answer: (d).All of the above Explanation:A budget center refers to a unit responsible for the preparation of budgets and the application of budgetary control. In the context of an insurance company, various offices like branch, divisional, and regional offices can have their own budgets and be responsible for achieving targeted revenue collection, maintaining work within targeted costs, and making a target profit during the budget period. Therefore, all of the options are valid as budget centers in this scenario.
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