Question

Which one of the following are the components of the financial budgets?

	a.	Budgeted statement of profit or loss, budgeted statement of financial position, cash budget and capital expenditure budget.
	b.	Budgeted statement of profit or loss, sales/fees budget and cash budget.
	c.	Operating budget and production budget.
	d.	Capital expenditure budget and manufacturing budget.

Which one of the following statements about a budget is correct?

	a.	Budget targets are always impossible to meet.
	b.	Budgets must be prepared by all types of entities.
	c.	It is an entity's short-term plan expressed quantitatively.
	d.	It is an entity's long-term plan expressed qualtitatively.

Which one of the following does the strategic planning process relate to?

	a.	Large entities only.
	b.	Shorter term planning (usually less than 1 year).
	c.	Longer term planning (often 3-5 years).
	d.	Shorter term planning (usually 1-3 months).

Which one of the following factors will most likely have a negative impact on the manager's motivation with regards to the budget?

	a.	The budget targets are challenging but attainable.
	b.	The manager's input was highly regarded throughout the budget setting process.
	c.	The budget includes some budgetary slack.
	d.	The budget provides too little scope for managers to perform their duties.

Answer 1

Components of financial budgets Budgeted statement of profit or loss, budgeted statement of financial position, cash budget and capital expenditure budget. Answer: (A) Correct statement about budget It is an entity's short-term plan expressed quantitatively. Answer: (D) Strategic planning process Strategic planning process relates to longer term planning (often 3-5 years). Answer: (C) Factor that will most likely have a negative impact on manager' motivation The budget provides too little scope for managers to perform their duties. Answer: (D)