9.1 Purpose of budgeting

    Cards (39)

    • What does a budget guide in terms of resource allocation?
      Money, staff, materials
    • Match the budgeting objective with its purpose:
      Planning and control ↔️ Estimating income and expenditure
      Resource allocation ↔️ Guiding how resources should be used
      Performance measurement ↔️ Evaluating actual performance
    • Arrange the following benefits of financial targets in logical order:
      1️⃣ Planning and control
      2️⃣ Resource allocation
      3️⃣ Performance measurement
      4️⃣ Sustainability and growth
    • Financial targets provide clear direction, enable efficient resource management, and support strategic goals
    • A budget aligns organizational activities with strategic goals.

      True
    • What is the income component of a budget intended to represent?
      Total expected revenue
    • Budgeting fosters accountability by assigning responsibility for achieving financial goals.

      True
    • How does budgeting provide insights into efficiency?
      Tracks expenses and revenue
    • A budget is a financial plan that estimates an organization's income and expenditure
    • Planning and Control is a key objective of budgeting.

      True
    • What does Resource Allocation ensure in budgeting?
      Efficient use of resources
    • Financial targets guide the organization in effective activity planning and cost control
    • Achieving financial targets ensures sustainability and growth for the organization.

      True
    • How does budgeting align with strategic goals in resource allocation?
      Ensures efficient resource use
    • Budgets provide data-driven insights to guide resource investment decisions.

      True
    • Budgeting enables organizations to evaluate actual performance against set financial goals, identifying areas of success or shortfall
    • What insights does budgeting provide regarding resource utilization?
      Efficiency insights
    • Financial budgets focus on the organization's overall financial performance.

      True
    • Financial budgets include consolidated financial statements such as the income statement, balance sheet, and cash flow
    • Budgets prioritize critical activities, allowing organizations to allocate resources where they will have the greatest impact
    • What is the role of budgeting as a performance measurement tool?
      Compares actual results against targets
    • Budgeting fosters accountability by assigning responsibility for achieving targets.

      True
    • Operational budgets plan and control day-to-day operations
    • What are examples of operational budgets?
      Sales, production, marketing budgets
    • Operational budgets manage specific business activities, while financial budgets provide a holistic view of financial performance.
      True
    • What is a budget designed to estimate over a specific period?
      Income and expenditure
    • A budget example includes detailing expected sales revenue against planned expenses.

      True
    • One of the key objectives of budgeting is planning and control
    • The expenditure component of a budget includes planned expenses for different categories
    • Budgeting helps organizations set goals and manage resources effectively.
      True
    • What does budgeting ensure in terms of resource allocation?
      Efficient use across departments
    • Financial targets act as a benchmark to evaluate actual performance
    • Budgeting aligns resource allocation with strategic goals.

      True
    • What is the role of budgeting in strategic alignment for resource allocation?
      Supporting growth and development
    • Budgeting allows organizations to evaluate actual performance against planned targets
    • Budgeting fosters accountability for achieving financial goals.

      True
    • What is the primary purpose of a budget in managing resources and controlling costs?
      Aligning with strategic goals
    • What is the primary purpose of budgeting in performance measurement?
      Compare actual results against targets
    • Budgeting sets clear financial targets, enabling organizations to evaluate actual performance against planned objectives, identifying areas of success or shortfall
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