Budget

Correct answer: A. When temporary cash shortage has to be met

Borrowing can be planned for temporary cash shortage. Link borrowing with cash deficit management in exams.

Correct answer: A. Because funds can be better used or invested

Planned use of surplus funds can benefit the organization. Remember surplus fund management in exams.

Correct answer: A. Viewing targets realism responsibility and variance together

Budget analysis should consider targets quality cost and responsibility together. Remember integrated analysis in exams.

Correct answer: A. A plan expressed in numerical terms

The direct answer is A: a plan expressed in numerical terms. In planning, a budget converts expected activities and results into figures. It may show expected sales, production, revenue, costs, cash receipts, payments, or resource use for a specified period. Because the plan is expressed numerically, managers can communicate it, allocate resources, compare actual results with planned results, and investigate differences. Option A is correct and gives the standard meaning of a budget. Option B is wrong because a conduct rule tells employees what behaviour is compulsory; it is not necessarily numerical. Option C is wrong because a sequential method of doing work is a procedure. Option D is wrong because a long-term motivational statement is closer to a vision or broad objective, not a budget. A budget is therefore not merely a list of wishes; it is a quantified plan connected with a period and expected performance. Memory cue: budget equals plan plus numbers plus a time period.

Correct answer: B. Budget

A plan stating an amount of expenditure is a budget. In exams, link money or quantity targets with budget.

Correct answer: C. Budget is a numerical plan while objective states desired result

An objective gives direction and a budget gives numerical resource planning. In exams, identify target and budget by context.

Correct answer: D. Because actual performance can be compared with the budget

A budget gives standards against which actual results are compared. In exams, connect budget and control through comparison.

Correct answer: A. Production budget

An estimate of production in units is a production budget. In exams, treat quantity-based production plans as budgets.

Correct answer: B. In money or quantity

A budget is a numerical statement of expected results for a specified period. It may be expressed in monetary terms, such as a sales budget in rupees, or in physical quantities, such as a production budget in units. An order alone is not a budget because it does not state planned results numerically. Exam tip: identify a budget by its numerical and time-bound nature.

Correct answer: C. No payment will be made without approval

No payment without approval is a binding rule. In exams, keep commands and prohibitions separate from budget.

Correct answer: D. To estimate cash receipts and payments

A cash budget estimates cash inflows and outflows. In exams, connect cash budget with liquidity planning.

Correct answer: A. To help estimate future sales and expenses

A budget is based on future estimates. In exams, treat forecasting as a base of budget preparation.

Correct answer: A. Analyse the reasons

When a difference appears, first analyse the reason for variance. In exams, remember analysis before action in budgetary control.

Correct answer: B. Sales budget

A sales budget estimates sales quantity and value. In exams, connect sales forecast with sales budget.

Correct answer: A. It helps departments align their numerical plans

Direct answer: Option A, it helps departments align their numerical plans. A budget translates plans into figures such as expected sales, production, purchases, labour cost and cash needs. Departments depend on one another: sales forecasts influence production, production influences materials and labour, and all of these influence cash. When these figures are prepared together, departments can coordinate rather than make conflicting plans. Option A is correct because it directly describes this alignment. Option B is wrong because a budget does not end all rules; rules and budgets serve different purposes. Option C is wrong because customers are not appointed by a budget. Option D is wrong because laws are made by authorised legislative bodies, not by an organisational budget. A budget is therefore both a planning and coordination tool. Memory cue: linked departmental numbers create coordinated action.

Correct answer: C. Capital budget

Expenditure on long-term assets relates to capital budget. In exams, connect assets like machines and buildings with capital budgeting.

Correct answer: D. Weak control over expenses and resources

A budget is useful only when followed and reviewed. In exams, treat budget as an action-oriented plan.

Correct answer: A. When activity level may change

A flexible budget adjusts according to changing activity levels. In exams, connect changing output with flexible budget.

Correct answer: A. It may be less useful when activity level changes

A fixed budget is based on one activity level. In exams, remember its limitation under changing conditions.

Correct answer: B. Purchase budget

A purchase budget includes quantity and cost of material purchases. In exams, identify raw material purchase with purchase budget.

Correct answer: A. Policy gives broad guidance and budget may support it in numbers

Policy gives direction while budget shows resource allocation. In exams, treat plan types as distinct but connected.

Correct answer: A. Employee confusion and poor performance evaluation

An unrealistic budget can affect both motivation and evaluation. In exams, write that budgets should be realistic.

Correct answer: A. Because they know their department's real needs better

Participation makes the budget more practical. In exams, connect participative budgeting with acceptance.

Correct answer: A. Production budget

A production budget can be prepared in number of units. In exams, do not restrict budget only to money terms.

Correct answer: A. Arrange short-term finance in advance

Cash budget gives advance warning of shortage. In exams, treat cash budget as a liquidity planning tool.