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In Class 12 Business Studies, the topic Budget in the chapter Planning explains how an organisation expresses its expected activities and results in numerical terms for a specific period. Students learn how budgets support planning, coordination and control by setting targets, allocating resources and comparing actual performance with planned figures. The topic also helps them understand how deviations can guide corrective action and improve managerial decision-making.
Expert · Level 3 · 25 questions
TOPIC PRACTICE
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Cash balance will automatically increase
Production will always become zero
Sales estimate may become unrealistic
Rule will turn into a budget
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When an expensive machine is to be purchased and payment timing affects cash
When only office wall colour is to be chosen
When writing employee attendance rule
When deciding customer greeting style
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Excellent cost control
Perfect financial discipline
Creation of cash surplus
Long-term risk due to short-term saving
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When production always remains the same
When actual output is very different from budgeted output
When no expenses are recorded
When only policy has to be written
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Cash flow
Capital investment
Budgetary slack
Sales forecast
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It checks the usefulness of every activity from a fresh base
It repeats the previous budget without checking
It always makes all expenses zero
It turns budget into a rule
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Delete March records
Stop April sales
Treat the budget as irrelevant
Plan short-term finance for March and repayment in April
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Treat all sales as cash receipts in the same period
Show cash receipts according to the collection period
Eliminate the production budget
Treat all cash payments as zero
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When actual data is received on time
When budget is realistic
When punishment is given without knowing the cause of variance
When departments are given targets
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Production quantity does not depend only on sales
Budget is never numerical
A rule is always a budget
Cash budget is useless
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All figures are automatically correct
Need for budget has ended
Rules are stronger
There is a problem in coordination and assumptions
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Small and uncontrollable variance
Large and controllable variance
Colour-related variance
Variance without data
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Misalignment between budget and strategy
Perfection of cash budget
Clarity of rule
Sequence of procedure
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Office logo
Employee nameplate
Cost and purchase price
Purpose of policy
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It is always superior efficiency
It ends the cash budget
It increases the production budget
It may be misleading saving
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When managers provide ground-level facts
When department heads deliberately ask for easy targets
When realistic estimates are used
When communication is open
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When market and demand are changing rapidly
When all conditions are stable
When no forecast is needed
When no budget is to be written
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Training budget
Procedure chart
Cash budget
Conduct rule
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Production may be disrupted due to raw material shortage
Sales will always increase
Cash surplus is certain
Rules will end
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Operational causes and corrective action are not examined after variance report
Actual results are compared with budget
Budget gives targets to responsibility centres
Records are maintained on time
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If the project ignores long-term strategic value and risk analysis
If the project shows cash outflow
If machine purchase is a fixed asset
If payment schedule is prepared
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Resources may get unnecessarily blocked
All expenses will be zero
Cash budget will be removed
Sales target will automatically be achieved
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Always keep targets secret
Never measure actual performance
Targets should be realistic and resistant to manipulation
Remove records
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When lower cost is due to better efficiency
When lower cost is due to stopping safety training
When records are correct
When output is planned
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Inventory mismatch and delivery failure
logo clarity / Logo clarity
office decoration / Office decoration
rule enforcement / Rule enforcement
Question 1ExpertLevel 3
If a company prepares its sales budget by only looking at last year's sales and ignores a new competitor in the market, what is the main budgeting risk?यदि कंपनी बिक्री बजट बनाते समय केवल पिछले वर्ष की बिक्री देखती है और बाजार में आए नए प्रतिस्पर्धी को नहीं मानती, तो मुख्य बजटीय जोखिम क्या होगा?
Correct answer:सही उत्तर:C
Current market conditions must be included in budgeting. In exams, combine historical data with current factors.बजट में वर्तमान बाजार स्थितियों को शामिल करना जरूरी है। परीक्षा में historical data को current factors के साथ जोड़कर देखें।
In which situation should both capital budget and cash budget be considered together?किस परिस्थिति में पूंजी बजट और नकद बजट दोनों को साथ देखकर निर्णय लेना चाहिए?
Correct answer:सही उत्तर:A
Machine purchase is capital investment and its payment affects cash flow. In exams, check both capital and cash impact in investment decisions.मशीन खरीद पूंजी निवेश है और उसका भुगतान cash flow को प्रभावित करता है। परीक्षा में investment decision में capital और cash impact दोनों देखें।
If quality inspection cost is removed from the budget to reduce cost, what type of budgeting problem is this?यदि बजट में लागत घटाने के लिए गुणवत्ता-जाँच खर्च हटा दिया जाए, तो यह किस प्रकार की बजटीय समस्या है?
Correct answer:सही उत्तर:D
Removing quality checks may increase defects and complaints. In exams, do not always treat lower spending as good.गुणवत्ता-जाँच हटाने से दोष और शिकायतें बढ़ सकती हैं। परीक्षा में कम खर्च को हमेशा अच्छा न मानें।
In which situation does a flexible budget give fairer performance evaluation than a fixed budget?लचीला बजट किस स्थिति में स्थिर बजट की तुलना में अधिक न्यायसंगत प्रदर्शन मूल्यांकन देता है?
Correct answer:सही उत्तर:B
Flexible budget adjusts costs according to activity level. In exams, choose flexible budget when output changes.Flexible budget activity level के अनुसार खर्चों को समायोजित करता है। परीक्षा में बदलते output पर flexible budget चुनें।
If a department deliberately overstates expenses to get more resources, what is it called?यदि कोई विभाग अधिक संसाधन पाने के लिए जानबूझकर खर्च का अनुमान बढ़ा देता है, तो इसे क्या कहा जाएगा?
Correct answer:सही उत्तर:C
Deliberately easy or inflated budgets are called budgetary slack. In exams, consider honesty of budget data important.जानबूझकर आसान या बढ़ा हुआ budget slack कहलाता है। परीक्षा में budget data की ईमानदारी को महत्वपूर्ण मानें।
What is an expert-level advantage of zero-based budgeting?शून्य-आधारित बजट का expert-level लाभ क्या है?
Correct answer:सही उत्तर:A
Zero-based budgeting does not automatically accept old expenses. In exams, connect it with waste control and justification.Zero-based budgeting पुराने खर्चों को automatically स्वीकार नहीं करता। परीक्षा में इसे waste control और justification से जोड़ें।
If the cash budget shows shortage in March and surplus in April, what is the most appropriate managerial decision?यदि नकद बजट में मार्च में कमी और अप्रैल में अधिशेष दिखे, तो सबसे सही प्रबंधकीय निर्णय क्या होगा?
Correct answer:सही उत्तर:D
Cash budget helps in timing-based liquidity decisions. In exams, view shortages and surpluses with time.Cash budget timing-based liquidity decisions में मदद करता है। परीक्षा में shortage और surplus को समय के साथ देखें।
If the sales budget has high credit sales, what adjustment is necessary in the cash budget?यदि बिक्री बजट में उधार बिक्री बहुत अधिक है, तो नकद बजट में कौन-सा समायोजन जरूरी होगा?
Correct answer:सही उत्तर:B
A credit sale is recorded when the sale takes place, but the cash may be received in a later period. Therefore, the cash budget should schedule cash receipts from customers according to the expected collection period. Option A is the closest distractor because it incorrectly treats credit sales as immediate cash sales. Exam tip: a sales budget estimates sales, whereas a cash budget shows the timing of actual cash receipts and payments.उधार बिक्री के समय बिक्री तो दर्ज हो जाती है, पर नकद उसी अवधि में प्राप्त नहीं होता। इसलिए नकद बजट में ग्राहकों से प्राप्त होने वाली राशि को निर्धारित वसूली अवधि के अनुसार अलग-अलग महीनों या अवधियों में दिखाया जाता है। विकल्प A निकटतम भ्रामक विकल्प है, क्योंकि वह उधार बिक्री को तत्काल नकद बिक्री मान लेता है। परीक्षा टिप: बिक्री बजट आय/बिक्री का अनुमान बताता है, जबकि नकद बजट वास्तविक नकद प्राप्ति और भुगतान का समय बताता है।
In which situation can the conclusion of budgetary control be wrong?किस स्थिति में बजट नियंत्रण का निष्कर्ष गलत हो सकता है?
Correct answer:सही उत्तर:C
Action without knowing the cause of variance may be wrong. In exams, write that cause analysis is necessary after comparison.Variance का कारण जाने बिना action गलत हो सकता है। परीक्षा में comparison के बाद cause analysis जरूरी लिखें।
If desired closing stock is included in the production budget, what does it indicate?यदि production budget में desired closing stock जोड़ा गया है, तो यह किस बात को दर्शाता है?
Correct answer:सही उत्तर:A
Production budget is affected by sales as well as inventory policy. In exams, remember closing stock in production calculation.Production budget sales के साथ inventory policy से भी प्रभावित होता है। परीक्षा में closing stock को production calculation में याद रखें।
If figures in sales, production and cash budgets do not match within the master budget, what is the main indication?यदि master budget में बिक्री, उत्पादन और नकद बजट के figures आपस में मेल नहीं खाते, तो मुख्य संकेत क्या है?
Correct answer:सही उत्तर:D
Logical alignment of functional budgets is necessary in a master budget. In exams, treat inconsistent figures as a coordination issue.Master budget में functional budgets का logical alignment जरूरी है। परीक्षा में inconsistent figures को coordination issue मानें।
Which type of variance should management prioritise?किस प्रकार की variance पर management को प्राथमिकता से ध्यान देना चाहिए?
Correct answer:सही उत्तर:B
Action is possible on significant and controllable variance. In exams, remember both materiality and controllability.Significant और controllable variance पर action संभव होता है। परीक्षा में materiality और controllability दोनों याद रखें।
If a company adopts premium positioning but cuts the customer service budget, what problem is visible?यदि कंपनी premium positioning अपनाती है लेकिन customer service budget घटा देती है, तो कौन-सी समस्या दिखती है?
Correct answer:सही उत्तर:A
Budget provides resources to strategy. In exams, check alignment between strategic goals and budget allocation.Budget strategy को resources देता है। परीक्षा में strategic goals और budget allocation का मेल देखें।
If inflation is ignored while preparing a budget, which estimate may be affected first?यदि बजट बनाते समय inflation को नजरअंदाज किया गया, तो कौन-सा अनुमान सबसे पहले प्रभावित हो सकता है?
Correct answer:सही उत्तर:C
Inflation can increase expenses and purchase costs. In exams, include external factors in budget assumptions.Inflation खर्च और खरीद लागत को बढ़ा सकती है। परीक्षा में external factors को budget assumptions में शामिल करें।
If actual expense is below budget because preventive maintenance was postponed, what is the correct interpretation?यदि वास्तविक खर्च budget से कम है क्योंकि preventive maintenance टाल दिया गया, तो सही व्याख्या क्या होगी?
Correct answer:सही उत्तर:D
Postponing maintenance may increase future breakdown cost. In exams, examine even favourable variance by cause.Maintenance टालना भविष्य में breakdown cost बढ़ा सकता है। परीक्षा में favourable variance को भी कारण से जाँचें।
In which case can participative budgeting also reduce budget quality?किस मामले में participative budgeting बजट की गुणवत्ता घटा भी सकता है?
Correct answer:सही उत्तर:B
Participation may carry a risk of budgetary slack. In exams, remember both benefit and limitation of participative budgeting.Participation के साथ budgetary slack का risk हो सकता है। परीक्षा में participative budgeting के benefit और limitation दोनों याद रखें।
In which situation will a rolling budget be better than a traditional annual budget?किस स्थिति में rolling budget पारंपरिक वार्षिक बजट से बेहतर होगा?
Correct answer:सही उत्तर:A
Rolling budget is useful in a changing environment due to regular updates. In exams, connect uncertainty with rolling budget.Rolling budget regular update से changing environment में उपयोगी होता है। परीक्षा में uncertainty को rolling budget से जोड़ें।
If budgeted sales were achieved but collections came very late, which budget would give better warning?यदि budgeted sales तो पूरी हो गई लेकिन collection बहुत देर से आया, तो कौन-सा budget अधिक चेतावनी देता?
Correct answer:सही उत्तर:C
Cash budget shows collection timing. In exams, distinguish sales achievement from cash availability.Cash budget collection timing को दिखाता है। परीक्षा में sales achievement और cash availability को अलग समझें।
If departmental budgets are prepared separately and purchase budget is lower than production needs, what will happen?यदि departmental budgets अलग-अलग बनें और purchase budget production needs से कम हो, तो क्या प्रभाव होगा?
Correct answer:सही उत्तर:A
Operations are affected when functional budgets lack coordination. In exams, check purchase and production budget alignment.Functional budgets में coordination न हो तो operations प्रभावित होते हैं। परीक्षा में purchase और production budget alignment देखें।
Which statement shows the mistake of treating budgetary control only as an accounting exercise?कौन-सा कथन budgetary control को केवल accounting exercise मानने की गलती दिखाता है?
Correct answer:सही उत्तर:A
Budgetary control needs managerial action along with accounting. In exams, write corrective action after variance report.Budgetary control में accounting के साथ managerial action जरूरी है। परीक्षा में variance report के बाद corrective action लिखें।
In which situation can a capital budgeting decision be weak despite quick payback?किस परिस्थिति में capital budgeting में payback जल्दी होने के बावजूद decision कमजोर हो सकता है?
Correct answer:सही उत्तर:A
Quick payback alone is not enough. In exams, also check risk and strategy in capital budget decisions.केवल जल्दी payback पर्याप्त नहीं है। परीक्षा में capital budget decision में risk और strategy भी देखें।
If the contingency reserve in a budget is kept excessively high, what risk may arise?यदि बजट में contingency reserve बहुत अधिक रखा गया है, तो कौन-सा जोखिम पैदा हो सकता है?
Correct answer:सही उत्तर:A
Contingency is prudent but excessive reserve can make funds idle. In exams, see the balance between safety and efficiency.Contingency prudent है लेकिन बहुत अधिक reserve funds को idle कर सकता है। परीक्षा में safety और efficiency का संतुलन देखें।
If budget targets are linked with performance rewards, what precaution is necessary?यदि बजट लक्ष्य और performance reward जुड़ा है, तो कौन-सी सावधानी जरूरी है?
Correct answer:सही उत्तर:C
Reward-linked budgets may increase risk of wrong reporting. In exams, connect target design with fairness.Reward-linked budget में गलत reporting का risk बढ़ सकता है। परीक्षा में target design को fairness से जोड़ें।
In which situation can a favourable cost variance actually be a bad sign?किस स्थिति में favourable cost variance वास्तव में खराब संकेत हो सकता है?
Correct answer:सही उत्तर:B
Stopping safety training can increase future risks. In exams, check the quality of favourable variance.Safety training रोकना भविष्य के risk बढ़ा सकता है। परीक्षा में favourable variance की quality check करें।
If assumptions of the sales team and production team differ during budget preparation, what risk increases?यदि budget preparation में sales team और production team के assumptions अलग हैं, तो किसका खतरा बढ़ेगा?
Correct answer:सही उत्तर:A
Different assumptions can make sales and production budgets conflict. In exams, consider common assumptions necessary for coordination.अलग assumptions से sales और production budgets टकरा सकते हैं। परीक्षा में common assumptions को coordination के लिए जरूरी मानें।
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