BUSN278 Budgeting & Forecasting
Final Exam Review (Qns & Ans)
2025
1. What is the primary purpose of budgeting in an organization?
A. To ensure profits are distributed equally among employees
B. To plan and allocate financial resources effectively
C. To limit organizational growth
D. To meet regulatory compliance requirements
ANS: B. To plan and allocate financial resources effectively
Rationale: Budgeting helps organizations prioritize and
allocate financial resources efficiently.
2. Which forecasting method relies on historical data to predict
future trends?
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, A. Qualitative forecasting
B. Quantitative forecasting
C. Arbitrary estimation
D. Intuition-based forecasting
ANS: B. Quantitative forecasting
Rationale: Quantitative forecasting uses numerical data for
trend prediction.
3. What does a variance analysis in budgeting measure?
A. How much a company owes suppliers
B. The difference between actual performance and budgeted
figures
C. The amount of product inventory remaining
D. Employee productivity levels
ANS: B. The difference between actual performance and
budgeted figures
Rationale: Variance analysis identifies discrepancies between
planned and actual financial outcomes.
4. Which of the following is NOT a characteristic of zero-based
budgeting?
A. Every expense must be justified
©2025
, B. Budget starts from zero each cycle
C. Relies on historical budgeting data
D. Promotes cost control
ANS: C. Relies on historical budgeting data
Rationale: Zero-based budgeting requires justification without
relying on past budgets.
5. Which forecasting method uses expert opinions to predict
future scenarios?
A. Time-series forecasting
B. Regression analysis
C. Delphi method
D. Financial ratio analysis
ANS: C. Delphi method
Rationale: The Delphi method gathers expert judgments to
predict trends and outcomes.
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Fill-in-the-Blank Questions
6. ________ forecasting analyzes seasonal patterns to predict
future trends.
©2025
, ANS: Time-series
Rationale: Time-series forecasting assesses recurring patterns
like seasons and cycles.
7. Budget __________ outlines the allocation of funds for
different organizational activities.
ANS: Distribution
Rationale: Budget distribution ensures resources are allocated
appropriately across departments.
8. ________ budgeting involves setting a financial plan that
matches anticipated revenue with expenses.
ANS: Balanced
Rationale: Balanced budgeting avoids deficits by aligning
revenues and costs.
9. The process of using past financial data to predict future cash
flows is known as __________ analysis.
ANS: Trend
Rationale: Trend analysis identifies patterns in historical data
for forecasting purposes.
©2025
Final Exam Review (Qns & Ans)
2025
1. What is the primary purpose of budgeting in an organization?
A. To ensure profits are distributed equally among employees
B. To plan and allocate financial resources effectively
C. To limit organizational growth
D. To meet regulatory compliance requirements
ANS: B. To plan and allocate financial resources effectively
Rationale: Budgeting helps organizations prioritize and
allocate financial resources efficiently.
2. Which forecasting method relies on historical data to predict
future trends?
©2025
, A. Qualitative forecasting
B. Quantitative forecasting
C. Arbitrary estimation
D. Intuition-based forecasting
ANS: B. Quantitative forecasting
Rationale: Quantitative forecasting uses numerical data for
trend prediction.
3. What does a variance analysis in budgeting measure?
A. How much a company owes suppliers
B. The difference between actual performance and budgeted
figures
C. The amount of product inventory remaining
D. Employee productivity levels
ANS: B. The difference between actual performance and
budgeted figures
Rationale: Variance analysis identifies discrepancies between
planned and actual financial outcomes.
4. Which of the following is NOT a characteristic of zero-based
budgeting?
A. Every expense must be justified
©2025
, B. Budget starts from zero each cycle
C. Relies on historical budgeting data
D. Promotes cost control
ANS: C. Relies on historical budgeting data
Rationale: Zero-based budgeting requires justification without
relying on past budgets.
5. Which forecasting method uses expert opinions to predict
future scenarios?
A. Time-series forecasting
B. Regression analysis
C. Delphi method
D. Financial ratio analysis
ANS: C. Delphi method
Rationale: The Delphi method gathers expert judgments to
predict trends and outcomes.
---
Fill-in-the-Blank Questions
6. ________ forecasting analyzes seasonal patterns to predict
future trends.
©2025
, ANS: Time-series
Rationale: Time-series forecasting assesses recurring patterns
like seasons and cycles.
7. Budget __________ outlines the allocation of funds for
different organizational activities.
ANS: Distribution
Rationale: Budget distribution ensures resources are allocated
appropriately across departments.
8. ________ budgeting involves setting a financial plan that
matches anticipated revenue with expenses.
ANS: Balanced
Rationale: Balanced budgeting avoids deficits by aligning
revenues and costs.
9. The process of using past financial data to predict future cash
flows is known as __________ analysis.
ANS: Trend
Rationale: Trend analysis identifies patterns in historical data
for forecasting purposes.
©2025
