BOMI- Budgeting and Accounting Questions and Answers 100% Pass
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Module
BOMI- Budgeting and Accounting
Institution
BOMI- Budgeting And Accounting
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...
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.
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,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.
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,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?
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, ✔✔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.
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