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3.9 True or False Quiz

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  • Unit 3 - Finance/
  • 3.9 Budgets (HL)/
  • 3.9 True or False Quiz

Unit 3.9 True or False - Budgets (HL only)

To test your understanding of this topic (Budgets), answer the following true or false questions.

No.StatementTrue or False?
1.Budgeting helps managers to have better control an organization’s finances.

True

2.A department or unit of a business that incurs costs but is not involved in making any profit is known as a profit centre.

False - Cost centre

3.Budgets can be used to obtain information about the activities of competitors.

False - these are internal

4.Variance refers to the difference between the actual outcome and the budgeted or planned outcome.

True

5.Budgets helps managers to plan resource allocation within a business organization.

True

6.A profit centre is a part of an organization that incurs costs and also generates profit.

True

7.A budget can assist managers with planning, monitoring, and reviewing business activities.

True

8.A Chief Financial Officer (CFO) has general control and management of the master budget of a company.

True

9.A master budget is used to schedule work and order raw materials.

False - this is a production budget

10.A drawback of using cost and profit centres is that it can be difficult to accurately and objectively assign overhead costs to each centre.

True

11.A sales budget is a forecast of the planned sales revenue by value or volume.

True

12.A limitation of budgeting is that there can be unforeseen changes which can impact on budgeted figures, causing large variances.
True
13.A marketing budget enables managers to plan spending on various promotional campaigns.

True

14.An advantage of using cost and profit centres is that managers are made more accountable for their department’s contribution towards costs.

True

15.A master budget consolidates the budgets from different departments within an organization.

True

16.A limitation of budgets is that they are less useful for businesses that face erratic and unpredictable fluctuations.

True

17.A production budget will impact on the amount of advertising, sponsorship, and sales promotion.

False - refers to a marketing budget

18.Delegating control to managers in charge of cost and profit centres may improve their level of motivation.

 True

19.A limitation of budgets is that they ignore qualitative factors that may influence management decision-making.

True

20.Variances can classified as either favourable or adverse.

True

Return to the Unit 3.9 - Budgets (HL only) homepage

Return to the Unit 3 - Finance and Accounts homepage