Static and Flexible Budgets Exam Question & Answers ( latest update).docx

Static and Flexible Budgets Exam
Question & Answers ( latest update)
Budgeting
A budget is: - CORRECT ANSWERS ✅-The formalized
financial plan for operations of an organization for a
specified future period


-An organization's financial roadmap


-It reflects management's forecast of the financial effects
of an organization's plans for one or more future time
periods.


Levers of control: Belief System - CORRECT ANSWERS
✅· Communicate organizational strategies and goals for
the entire organization as well as for each segment,
division, or department


· Motivate managers to plan in advance and to coordinate
operating activities


Master Budgets - CORRECT ANSWERS ✅-A
comprehensive plan for the upcoming accounting period.
-Usually prepared for a one-year period.
-Based on a series of budget assumptions.

, Static and Flexible Budgets Exam
Question & Answers ( latest update)

Master budget consists of several subsidary budgets in
two categories: - CORRECT ANSWERS ✅Operating
budgets:
Management's plan for revenues, production, and
operating costs


Financial budgets:
Management's plan for capital expenditures, long-term
financing, cash flows, and short-term financing


Levers of control: Boundary System - CORRECT
ANSWERS ✅·Authorize employees to engage in only
planned business activities and to spend within budget
limits


·Ensure sufficient cash to maintain financial viability


Levers of control: Interactive system - CORRECT
ANSWERS ✅·Engage in organizational learning by
investigating the strategic opportunities and threats
revealed by differences between planned and actual
performance