Chapter 6
Budgeting
Quiz Questions
Multiple Choice
1. Which of the followings forms of budgeting is preferred in sport as it begins with
a floor of expenses while also using cost behavior and cost identification
techniques?
a. Incremental budgeting
b. Program planning budgeting systems
c. Modified program planning budgeting systems
d. Zero based budgeting
e. Modified zero based budgeting
2. Last year’s budget is increased or decreased by a percentage using this method
of budgeting (a form of line-item budgeting).
a. Incremental budgeting
b. Program planning budgeting systems
c. Modified program planning budgeting systems
d. Zero based budgeting
e. Modified zero based budgeting
3. This budgeting system is associated with output budgeting in which specific goals
and objectives form the framework for a strategic, goal-oriented budgeting
process.
a. Incremental budgeting
b. Program planning budgeting systems
c. Modified program planning budgeting systems
d. Zero based budgeting
e. Modified zero based budgeting
4. This budgeting system requires starting the budgeting process with a zero base.
a. Incremental budgeting
b. Program planning budgeting systems
c. Modified program planning budgeting systems
d. Zero based budgeting
e. Modified zero based budgeting
5. Which of the following budgets allows management to forecast future
requirements related to property, facilities, and major equipment?
a. Revenue budget
b. Expense budget
c. Cash budget
d. Capital expenditure budget
e. Fixed asset budget
6. A __________ is a forecast because it is based on projecting future sales.
a. Revenue budget
b. Expense budget
c. Cash budget
d. Capital expenditure budget
e. Fixed asset budget
7. The __________ lists the primary activities undertaken by a unit to achieve its
goals and allocate dollar amounts to each.
a. Revenue budget
b. Expense budget
c. Cash budget
d. Capital expenditure budget
e. Fixed asset budget
8. The __________ forecasts how much cash the organization will have on hand
and how much it will need to meet expenses.
a. Revenue budget
b. Expense budget
c. Cash budget
d. Capital expenditure budget
e. Fixed asset budget
9. When using zero-based budgeting, each part of the organization in which budget
decisions are made is referred to as a __________.
a. Budget unit
b. Finance unit
c. Forecast unit
d. Decision unit
e. None of the above
10. Of the following, which is not an advantage of incremental budgeting?
a. The budget is stable and change is gradual.
b. The approach encourages managers to spend up to the budget to ensure
that the budget is maintained the following year.
c. Managers can operate their departments on a consistent basis.
d. Coordination between budgets is easier to achieve.
e. All of the above are advantages of incremental budgeting.
1. T or F Budgets are prepared in advance of the time period they cover.
2. T or F Forecasting is the process of defining a vision for your organization and
creating goals and objectives to help achieve this vision.
3. T or F An incremental budget is recommended, as it takes into account
changing circumstances.
4. T or F An incremental budget provides an incentive for developing new ideas.
5. T or F The development of goals and objectives for an organization or program
unit is fundamental to management planning and PPBS.
6. T or F A PPBS may allow support for irrational objectives.
7. T or F Zero-based budgeting is not well suited to the service industry.
8. T or F A ZBB encourages managers to look for alternatives.
9. T or F The going concern is a concept that assumes that an entity will operate
indefinitely.
10. T or F A MZBB considers previous money outlays.
Answers to Quiz Questions
Multiple Choice
True/False