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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 4 · 25 questions
TOPIC PRACTICE
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Cash budget
Production budget
Recruitment budget
Attendance budget
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Long-term planning and investment view may be missed
All expenses will disappear
Budget will not remain numerical
Control will always be perfect
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When actual expenses are to be hidden
When only making target easier
When a major tax rate change changes budget assumptions
When no data is available
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complete learning from performance / Complete learning from performance
sales forecasting / Sales forecasting
entry rule / Entry rule
office policy / Office policy
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Forecast states expected condition while budget becomes an approved action plan and control standard
wrong production timing and stock imbalance / Wrong production timing and stock imbalance
better rule enforcement / Better rule enforcement
zero cash payment / Zero cash payment
policy clarity / Policy clarity
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Inferior raw material was used to meet cost target
Quality budget is adequate
Sales and production are aligned
Actual data is timely
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Review supplier payments and borrowing schedule
Change office logo
Ignore production method
Delete budget records
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Government tax rate suddenly changes
Manager deliberately kept target low
Purchase order was not recorded
Stock counting was wrong
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Responsible people will not know targets and limits
Cash will always remain surplus
Sales will automatically double
budget becomes law / Budget becomes law
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If collection pattern is wrongly estimated
If production capacity is known
If sales quantity is realistic
If price list is approved
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Disconnect between strategy and resource allocation
Budgetary control is perfect
Cash receipts are guaranteed
Rules are highly clear
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cash budget with financing section / Cash budget with financing section
conduct rule / Conduct rule
sales slogan plan / Sales slogan plan
visitor procedure / Visitor procedure
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Profit and cash flow timing may differ
Profit budget is always useless
Cash balance has no relation to business
Budget was not numerical
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When departmental managers get decision authority within approved limits
When only top manager takes all decisions
When budget is kept secret
When actual results are not recorded
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Lack of budget effectiveness evaluation
cash surplus certainty / Certainty of cash surplus
production accuracy / Production accuracy
rule clarity / Rule clarity
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When material cost exceeds budget and the cause is unclear
When logo is redesigned
When office timing changes
When visitor pass is printed
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Quality outcome may be missed
Cash inflow will be guaranteed
Production units will double
Rules will be unnecessary
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When expenditure is high-value and strategically important
When choosing office pen colour
When cleaning notice board
When announcing tea break
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Budget gaming and resource waste
perfect efficiency / Perfect efficiency
cash surplus planning / Cash surplus planning
rule compliance / Rule compliance
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It connects strategy, resources, responsibility and control in numerical form
It only stops expenditure
It always replaces rule
It is prepared without assumptions
Question 1ExpertLevel 4
Which budget can quickly reveal weakness in debtors collection policy?कौन-सा बजट debtors collection policy की कमजोरी को जल्दी दिखा सकता है?
Correct answer:सही उत्तर:A
Debtors collection affects cash inflow. In exams, observe the effect of credit policy in cash budget.Debtors collection cash inflow को प्रभावित करता है। परीक्षा में credit policy का असर cash budget में देखें।
If the budget period is kept too short, what problem may occur?यदि budget period बहुत छोटा रखा गया है, तो कौन-सी समस्या हो सकती है?
Correct answer:सही उत्तर:D
A very short period may ignore strategic expenses. In exams, choose budget period according to purpose.बहुत छोटा period strategic expenses को ignore कर सकता है। परीक्षा में budget period को purpose के अनुसार चुनें।
In which situation will budget revision be considered good planning rather than weakness?किस स्थिति में budget revision को कमजोरी नहीं बल्कि अच्छी planning माना जाएगा?
Correct answer:सही उत्तर:C
Updating budget after major external change is logical. In exams, see revision as a response to changing assumptions.Major external change पर budget update करना logical है। परीक्षा में revision को changing assumptions के response के रूप में देखें।
If budgetary control focuses only on unfavourable variance and ignores favourable variance, what is missing?यदि budgetary control में केवल unfavourable variance पर ध्यान दिया जाता है और favourable variance ignored है, तो क्या कमी है?
Correct answer:सही उत्तर:A
Favourable variance can also be a basis for learning and future planning. In exams, analyse both types of variance.Favourable variance भी सीखने और future planning का आधार हो सकती है। परीक्षा में दोनों प्रकार की variance analyse करें।
Which option correctly states the expert-level difference between budget and forecast?किस विकल्प में budget और forecast का expert-level अंतर सही है?
Correct answer:सही उत्तर:A
Forecast may be an input but budget is an approved plan. In exams, do not write forecast and budget interchangeably.Forecast input हो सकता है लेकिन budget approved plan होता है। परीक्षा में forecast और budget को interchangeably न लिखें।
If the budget is prepared only by top management without input from operating managers, what risk increases?यदि बजट केवल top management बनाता है और operating managers से कोई input नहीं लेता, तो कौन-सा risk बढ़ेगा?
Correct answer:सही उत्तर:A
Operating managers know practical constraints. In exams, remember acceptance and realism risks in top-down budgeting.Operating managers practical constraints जानते हैं। परीक्षा में top-down budget में acceptance और realism risk याद रखें।
In which situation will direct labour budget be directly linked with production budget?किस स्थिति में direct labour budget production budget से सीधे जुड़ा होगा?
Correct answer:सही उत्तर:A
Production quantity affects direct labour hours and wages. In exams, connect labour budget with output level.Production quantity direct labour hours और wages को प्रभावित करती है। परीक्षा में labour budget को output level से जोड़ें।
If the budget target is too strict and managers avoid even necessary spending, what behavioural problem exists?यदि budget का लक्ष्य बहुत कठोर है और managers आवश्यक खर्च भी avoid करते हैं, तो कौन-सी behavioural problem है?
Correct answer:सही उत्तर:A
Overly strict budget can create wrong managerial behaviour. In exams, also consider the human behaviour impact of budget.अत्यधिक कठोर budget गलत managerial behaviour ला सकता है। परीक्षा में budget का human behaviour impact भी देखें।
Which type of budget helps show expected financial position?किस प्रकार का बजट अपेक्षित financial position दिखाने में मदद करता है?
Correct answer:सही उत्तर:B
A budgeted balance sheet shows expected assets and liabilities. In exams, connect financial position with budgeted balance sheet.Budgeted balance sheet expected assets और liabilities दिखाती है। परीक्षा में financial position को budgeted balance sheet से जोड़ें।
If seasonal demand is not shown separately in the sales budget, what operational problem may occur?यदि sales budget में seasonal demand को अलग से नहीं दिखाया गया, तो कौन-सी operational problem हो सकती है?
Correct answer:सही उत्तर:A
Seasonality affects production and inventory planning. In exams, connect seasonal sales with budget phasing.Seasonality production और inventory planning को प्रभावित करती है। परीक्षा में seasonal sales को budget phasing से जोड़ें।
In which situation is there a conflict between budget target and quality standard?किस स्थिति में बजट लक्ष्य और गुणवत्ता मानक के बीच conflict दिखता है?
Correct answer:सही उत्तर:A
Cost saving with quality compromise is not proper control. In exams, balance budget target with quality standard.Cost saving quality compromise के साथ सही control नहीं है। परीक्षा में budget target को quality standard से balance करें।
If the cash budget shows expected receipts being delayed, which decision is most appropriate?यदि cash budget में expected receipts delayed दिखती हैं, तो कौन-सा decision सबसे उचित होगा?
Correct answer:सही उत्तर:A
Direct answer: Option A, review supplier payments and the borrowing schedule. A cash budget is concerned with the timing of cash inflows and outflows, not merely total income and expenditure. If expected receipts are delayed, cash will arrive later than planned. This creates liquidity pressure: the organisation may not have enough cash on the due dates for suppliers, wages or other obligations. Management should therefore reschedule or prioritise payments where possible and review whether short-term borrowing is needed and when it should occur. Option A is correct because it directly responds to the timing problem. Option B is wrong because changing the office logo does not improve cash availability. Option C is wrong because ignoring production may worsen planning and cash needs. Option D is wrong because deleting records removes the information needed for control and decisions. Memory cue: “Delayed receipts require payment timing and finance review.”सीधा उत्तर: विकल्प A, supplier payments और borrowing schedule की समीक्षा करना। Cash budget में केवल total income और expenditure नहीं, बल्कि cash आने-जाने का समय भी महत्वपूर्ण होता है। Expected receipts देर से आने पर planned date पर cash उपलब्ध नहीं होगी। इससे liquidity pressure बनता है और supplier payments, wages तथा अन्य obligations चुकाने में कठिनाई हो सकती है। इसलिए management को payments को priority या reschedule करना चाहिए और यह देखना चाहिए कि short-term borrowing की जरूरत है या नहीं तथा borrowing कब करनी होगी। A सही है क्योंकि यह सीधे cash-timing problem का समाधान खोजता है। B गलत है, क्योंकि office logo बदलने से cash availability नहीं सुधरती। C गलत है, क्योंकि production method को ignore करने से planning और cash needs की समस्या बढ़ सकती है। D गलत है, क्योंकि records मिटाने से control और निर्णय के लिए जरूरी information समाप्त हो जाएगी। याद रखें: “Receipts delay हों तो payment timing और finance schedule review करें।”
In which situation can a budget variance be external and uncontrollable?किस स्थिति में budget variance external और uncontrollable हो सकता है?
Correct answer:सही उत्तर:A
Tax rate change is an external factor. In exams, separate variance into controllable and uncontrollable.Tax rate change external factor है। परीक्षा में variance को controllable और uncontrollable में अलग करें।
If the budget is not communicated, what will be the biggest practical weakness?यदि budget को communicate नहीं किया गया, तो सबसे बड़ी व्यावहारिक कमी क्या होगी?
Correct answer:सही उत्तर:A
Budget can be followed only when concerned people understand it. In exams, connect communication with implementation.Budget का पालन तभी होगा जब संबंधित लोग उसे समझें। परीक्षा में communication को implementation से जोड़ें।
In which situation can the cash budget be weak even when the sales budget is reliable?किस स्थिति में sales budget reliable होने के बाद भी cash budget कमजोर हो सकता है?
Correct answer:सही उत्तर:A
Cash budget depends on collection timing along with sales amount. In exams, do not mistake reliable sales for sufficient cash.Cash budget sales amount के साथ collection timing पर निर्भर करता है। परीक्षा में reliable sales को sufficient cash मानने की गलती न करें।
If a company adopts expansion strategy but the capital budget has no capacity addition, what does it indicate?यदि company expansion strategy अपनाती है लेकिन capital budget में capacity addition नहीं है, तो क्या संकेत मिलता है?
Correct answer:सही उत्तर:A
Expansion strategy may require capacity investment. In exams, connect capital budget with strategic resources.Expansion strategy को capacity investment की जरूरत हो सकती है। परीक्षा में capital budget को strategic resources से जोड़ें।
Which budget will better help plan expected borrowing and interest burden?किस budget से expected borrowing और interest burden की planning बेहतर होगी?
Correct answer:सही उत्तर:A
Cash shortage and borrowing need are identified from cash budget. In exams, connect financing needs with cash planning.Cash shortage और borrowing जरूरत cash budget से पता चलती है। परीक्षा में financing needs को cash planning से जोड़ें।
If actual profit is above budget but cash balance is negative, which explanation is most suitable?यदि actual profit budget से अधिक है लेकिन cash balance negative है, तो कौन-सा explanation सबसे उपयुक्त है?
Correct answer:सही उत्तर:A
Profit may arise from credit sales but cash may come later. In exams, analyse profit and liquidity separately.Profit credit sales से बन सकता है पर cash बाद में आ सकता है। परीक्षा में profit और liquidity को अलग-अलग analyse करें।
In which situation does budgetary control support decentralisation?किस स्थिति में budgetary control decentralisation को support करता है?
Correct answer:सही उत्तर:A
Budget limits clarify authority and responsibility. In exams, also connect budgetary control with delegation.Budget limits authority और responsibility को clear करते हैं। परीक्षा में budgetary control को delegation से भी जोड़ें।
If marketing budget has increased significantly but sales response is not measured, what weakness exists?यदि marketing budget बहुत बढ़ा है लेकिन sales response measure नहीं हो रहा, तो कौन-सी कमजोरी है?
Correct answer:सही उत्तर:A
With increased spending, output or impact measurement is necessary. In exams, connect budget with performance outcome.खर्च बढ़ाने के साथ output या impact measurement जरूरी है। परीक्षा में budget को performance outcome से जोड़ें।
In which case is it necessary to separately examine raw material price variance and usage variance?किस मामले में raw material price variance और usage variance अलग-अलग देखना जरूरी होगा?
Correct answer:सही उत्तर:A
Cost variance can arise from both price and quantity usage. In exams, analyse cost difference into components.Cost variance price और quantity usage दोनों से हो सकता है। परीक्षा में cost difference को components में analyse करें।
If a budget contains only financial numbers and no service quality indicators, what weakness remains in a service business?यदि budget में केवल financial numbers हैं और service quality indicators नहीं हैं, तो service business में कौन-सी कमी रहेगी?
Correct answer:सही उत्तर:A
In a service business, quality is important along with cost. In exams, also consider non-financial measures in budget control.Service business में cost के साथ quality भी important है। परीक्षा में budget control में non-financial measures भी सोचें।
In which situation will budget approval hierarchy be most necessary?किस स्थिति में budget approval hierarchy सबसे जरूरी होगी?
Correct answer:सही उत्तर:A
Proper approval control is necessary in high-value spending. In exams, connect budget approval with accountability.High-value spending में proper approval control जरूरी है। परीक्षा में budget approval को accountability से जोड़ें।
If managers do unnecessary spending at year-end to meet the budget target, how should it be understood?यदि budget target पूरा करने के लिए managers year-end में unnecessary spending करते हैं, तो इसे कैसे समझेंगे?
Correct answer:सही उत्तर:A
Use-it-or-lose-it behaviour can waste resources. In exams, remember unintended behavioural effects of budgets.Use-it-or-lose-it behaviour resources की बर्बादी कर सकता है। परीक्षा में budget behaviour के unintended effects याद रखें।
What is the strongest reason to treat budget as an expert-level planning tool?बजट को expert-level planning tool मानने का सबसे मजबूत कारण क्या है?
Correct answer:सही उत्तर:A
Budget is not just numbers but an integrated tool of planning and control. In exams, make the integrated role of budget a key point.बजट केवल संख्या नहीं बल्कि planning और control का integrated tool है। परीक्षा में budget की integrated role को प्रमुख point बनाएं।
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