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BOMI- Budgeting and Accounting Questions and Answers 100% Pass
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BOMI- Budgeting and Accounting Questions and Answers 100% Pass What is the purpose of a budget in an organization? The purpose of a budget is to plan and control financial resources, ensuring that funds are allocated effectively to meet organizational goals. What are fixed costs in budgeti...

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  • October 5, 2024
  • 130
  • 2024/2025
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  • Questions & answers

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BOMI- Budgeting and Accounting
Questions and Answers 100% Pass
What is the purpose of a budget in an organization?


✔✔The purpose of a budget is to plan and control financial resources, ensuring that funds are

allocated effectively to meet organizational goals.




What are fixed costs in budgeting?


✔✔Fixed costs are expenses that remain constant regardless of the level of production or sales,

such as rent and salaries.




How does variance analysis contribute to budgeting?


✔✔Variance analysis helps identify differences between budgeted and actual performance,

allowing organizations to make informed decisions and adjustments.




What is the role of forecasting in the budgeting process?


✔✔Forecasting involves predicting future financial performance based on historical data and

market trends, providing a foundation for effective budgeting.




1

,What is a cash flow statement?


✔✔A cash flow statement summarizes the inflows and outflows of cash in an organization,

showing how cash is generated and used over a specific period.




Why is it important to differentiate between operating and capital budgets?


✔✔Differentiating between operating and capital budgets helps organizations allocate resources

effectively for day-to-day operations versus long-term investments.




What is the break-even analysis in budgeting?


✔✔Break-even analysis determines the level of sales needed to cover costs, helping

organizations understand their financial viability.




How can budgeting support strategic planning?


✔✔Budgeting supports strategic planning by aligning financial resources with organizational

goals, ensuring that investments are made in areas that drive growth.




What is the significance of cost-benefit analysis in budgeting?


✔✔Cost-benefit analysis evaluates the expected financial benefits of a project against its costs,

aiding in decision-making and prioritization.

2

,How do overhead costs impact budgeting?


✔✔Overhead costs, which include indirect expenses like utilities and administrative salaries,

must be accurately estimated to ensure a realistic budget.




What is zero-based budgeting?


✔✔Zero-based budgeting requires justifying all expenses for each new period, starting from a

base of zero, rather than adjusting previous budgets.




What role do financial statements play in budgeting?


✔✔Financial statements provide critical information on past performance and current financial

health, guiding the budgeting process and future projections.




What is the importance of regular budget reviews?


✔✔Regular budget reviews allow organizations to track progress, identify discrepancies, and

make necessary adjustments to stay on target.




What are variable costs, and how do they affect budgeting?




3

, ✔✔Variable costs change with production levels, impacting the overall budget and requiring

careful monitoring to maintain financial stability.




What is the purpose of performance budgeting?


✔✔Performance budgeting focuses on the outcomes and efficiency of budget expenditures,

linking funding to results and accountability.




What is the primary difference between financial accounting and managerial accounting?


✔✔Financial accounting focuses on reporting financial information to external stakeholders,

while managerial accounting provides internal management with the information needed for

decision-making.




How do budgetary controls enhance financial management?


✔✔Budgetary controls help organizations monitor and regulate financial performance, ensuring

spending aligns with the budget and organizational goals.




What is an operating budget?


✔✔An operating budget outlines the expected income and expenses for the daily operations of

an organization over a specific period, usually a year.


4

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