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Subjects

Business Studies

Budget

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 4 · 25 questions

Practice questions

01Which budget can quickly reveal weakness in debtors collection policy?

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02If the budget period is kept too short, what problem may occur?

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03In which situation will budget revision be considered good planning rather than weakness?

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04If budgetary control focuses only on unfavourable variance and ignores favourable variance, what is missing?

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05Which option correctly states the expert-level difference between budget and forecast?

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06If the budget is prepared only by top management without input from operating managers, what risk increases?

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07In which situation will direct labour budget be directly linked with production budget?

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08If the budget target is too strict and managers avoid even necessary spending, what behavioural problem exists?

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09Which type of budget helps show expected financial position?

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10If seasonal demand is not shown separately in the sales budget, what operational problem may occur?

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11In which situation is there a conflict between budget target and quality standard?

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12If the cash budget shows expected receipts being delayed, which decision is most appropriate?

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13In which situation can a budget variance be external and uncontrollable?

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14If the budget is not communicated, what will be the biggest practical weakness?

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15In which situation can the cash budget be weak even when the sales budget is reliable?

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16If a company adopts expansion strategy but the capital budget has no capacity addition, what does it indicate?

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17Which budget will better help plan expected borrowing and interest burden?

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18If actual profit is above budget but cash balance is negative, which explanation is most suitable?

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19In which situation does budgetary control support decentralisation?

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20If marketing budget has increased significantly but sales response is not measured, what weakness exists?

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21In which case is it necessary to separately examine raw material price variance and usage variance?

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22If a budget contains only financial numbers and no service quality indicators, what weakness remains in a service business?

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23In which situation will budget approval hierarchy be most necessary?

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24If managers do unnecessary spending at year-end to meet the budget target, how should it be understood?

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25What is the strongest reason to treat budget as an expert-level planning tool?

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