BUSN278
Budgeting & Forecasting
Final Exam Review (Qns & Ans)
2025
1. Which budgeting approach starts from zero and builds a
budget based on the needs of each activity or project?
A. Incremental Budgeting
B. Zero-Based Budgeting
C. Rolling Budgeting
D. Activity-Based Budgeting
ANS: B. Zero-Based Budgeting
©2025
, Rationale: Zero-based budgeting begins from scratch and
requires justification for each expense, rather than using the
previous year’s budget as a baseline.
2. What is the primary purpose of a cash flow forecast?
A. To determine profitability
B. To estimate future cash inflows and outflows
C. To develop marketing strategies
D. To allocate resources between departments
ANS: B. To estimate future cash inflows and outflows
Rationale: Cash flow forecasting helps businesses anticipate
liquidity needs and ensure sufficient cash availability for
operations.
3. Which budgeting method incorporates continuous updates to
adapt to real-time changes?
A. Fixed Budgeting
B. Flexible Budgeting
C. Static Budgeting
D. Master Budgeting
ANS: B. Flexible Budgeting
©2025
, Rationale: Flexible budgeting adjusts to changes in activity
levels, making it more dynamic and responsive.
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Fill-in-the-Blank Questions
4. The _______ process involves allocating financial resources
to meet an organization’s strategic goals and objectives.
ANS: Budgeting
Rationale: Budgeting ensures that resources align with the
organization’s priorities and plans.
5. Variance analysis compares actual financial performance
against _______ to identify discrepancies.
ANS: Budgeted figures
Rationale: Variance analysis highlights areas where
performance deviates from the budget, enabling corrective
actions.
---
©2025
Budgeting & Forecasting
Final Exam Review (Qns & Ans)
2025
1. Which budgeting approach starts from zero and builds a
budget based on the needs of each activity or project?
A. Incremental Budgeting
B. Zero-Based Budgeting
C. Rolling Budgeting
D. Activity-Based Budgeting
ANS: B. Zero-Based Budgeting
©2025
, Rationale: Zero-based budgeting begins from scratch and
requires justification for each expense, rather than using the
previous year’s budget as a baseline.
2. What is the primary purpose of a cash flow forecast?
A. To determine profitability
B. To estimate future cash inflows and outflows
C. To develop marketing strategies
D. To allocate resources between departments
ANS: B. To estimate future cash inflows and outflows
Rationale: Cash flow forecasting helps businesses anticipate
liquidity needs and ensure sufficient cash availability for
operations.
3. Which budgeting method incorporates continuous updates to
adapt to real-time changes?
A. Fixed Budgeting
B. Flexible Budgeting
C. Static Budgeting
D. Master Budgeting
ANS: B. Flexible Budgeting
©2025
, Rationale: Flexible budgeting adjusts to changes in activity
levels, making it more dynamic and responsive.
---
Fill-in-the-Blank Questions
4. The _______ process involves allocating financial resources
to meet an organization’s strategic goals and objectives.
ANS: Budgeting
Rationale: Budgeting ensures that resources align with the
organization’s priorities and plans.
5. Variance analysis compares actual financial performance
against _______ to identify discrepancies.
ANS: Budgeted figures
Rationale: Variance analysis highlights areas where
performance deviates from the budget, enabling corrective
actions.
---
©2025
