Budgeting MCQS with Answers

Question 1

Which of the following is NOT a primary purpose of budgeting?

Accepted Answer

Guaranteeing profit

Answer

Planning

Answer

Control

Answer

Communication

Question 2

A budget that is designed to change in accordance with the level of activity actually attained is called a:

Accepted Answer

Flexible budget

Answer

Fixed budget

Answer

Zero-based budget

Answer

Master budget

Question 3

In zero-based budgeting (ZBB), every budget starts from:

Accepted Answer

Zero

Answer

The previous year's actuals

Answer

The previous year's budget

Answer

The industry average

Question 4

The master budget typically begins with the preparation of the:

Accepted Answer

Sales budget

Answer

Cash budget

Answer

Production budget

Answer

Capital expenditure budget

Question 5

Which budget shows the expected cash inflows and outflows?

Accepted Answer

Cash budget

Answer

Capital budget

Answer

Sales budget

Answer

Overhead budget

Question 6

A variance is defined as:

Accepted Answer

The difference between actual and budgeted results

Answer

The total cost of production

Answer

The profit margin

Answer

The amount of taxes owed

Question 7

Which of the following describes a 'favorable variance'?

Accepted Answer

Actual revenue is higher than budgeted

Answer

Actual costs are higher than budgeted

Answer

Actual revenue equals budgeted

Answer

Budgeted costs were underestimated

Question 8

Capital budgeting is primarily concerned with:

Accepted Answer

Evaluating long-term investment projects

Answer

Day-to-day cash management

Answer

Setting sales targets

Answer

Calculating employee bonuses

Question 9

Which of the following is a non-cash expense that is added back in cash budgeting?

Accepted Answer

Depreciation

Answer

Wages

Answer

Rent

Answer

Raw materials

Question 10

The production budget is calculated as:

Accepted Answer

Sales + Desired Ending Inventory - Beginning Inventory

Answer

Sales + Desired Ending Inventory

Answer

Sales - Beginning Inventory

Answer

Beginning Inventory + Purchases

Question 11

A continuous (or rolling) budget:

Accepted Answer

Drops the current month and adds a future month as it progresses

Answer

Is prepared once every 5 years

Answer

Is used only by non-profits

Answer

Only covers capital expenditures

Question 12

Which of the following budgets summarizes all the schedules of the operating and financial budgets?

Accepted Answer

Master budget

Answer

Cash budget

Answer

Flexible budget

Answer

Capital budget

Question 13

Budgetary slack occurs when managers:

Accepted Answer

Underestimate revenues or overestimate costs

Answer

Overestimate revenues and underestimate costs

Answer

Refuse to prepare a budget

Answer

Achieve exactly the budgeted amounts

Question 14

The direct materials budget is directly based on the:

Accepted Answer

Production budget

Answer

Sales budget

Answer

Cash budget

Answer

Capital budget

Question 15

Payback period is a technique used in:

Accepted Answer

Capital budgeting

Answer

Zero-based budgeting

Answer

Cash budgeting

Answer

Flexible budgeting

Budgeting MCQS with Answers

Which of the following is NOT a primary purpose of budgeting?

A budget that is designed to change in accordance with the level of activity actually attained is called a:

In zero-based budgeting (ZBB), every budget starts from:

The master budget typically begins with the preparation of the:

Which budget shows the expected cash inflows and outflows?

A variance is defined as:

Which of the following describes a 'favorable variance'?

Capital budgeting is primarily concerned with:

Which of the following is a non-cash expense that is added back in cash budgeting?

The production budget is calculated as:

A continuous (or rolling) budget:

Which of the following budgets summarizes all the schedules of the operating and financial budgets?

Budgetary slack occurs when managers:

The direct materials budget is directly based on the:

Payback period is a technique used in:

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