CBS Budget Development & Forecasting 3

Question 1

A city government must prepare a budget that cannot exceed revenue projections by law. This is an example of:

Accepted Answer

Balanced budget requirement

Answer

A balanced budget requirement mandates that planned expenditures not exceed projected revenues, common in public sector budgeting.

Question 2

In regression-based budget forecasting, the R-squared value measures:

Accepted Answer

The proportion of variance in the dependent variable explained by the independent variable(s)

Answer

R-squared (coefficient of determination) indicates how well the regression model explains the variability in the dependent variable, ranging from 0 to 1.

Question 3

Which scenario best illustrates the use of a flexible budget?

Accepted Answer

A manufacturer adjusts budgeted costs to reflect the actual units produced during the period

Answer

A flexible budget recalculates expected costs based on actual activity levels, enabling more meaningful performance comparisons.

Question 4

Budget padding, also known as budgetary slack, most commonly occurs when:

Accepted Answer

Managers overestimate revenues or underestimate costs to create a cushion

Answer

Budgetary slack occurs when managers deliberately build in extra cushion by inflating cost estimates or understating revenue projections.

Question 5

When forecasting personnel costs for the next fiscal year, which data point is LEAST relevant?

Accepted Answer

The prior year's office supply budget

Answer

Office supply costs are unrelated to personnel cost forecasting, which focuses on salaries, benefits, and headcount.

(CBS) Certified Budget Specialist Practice Test

(CBS) Certified Budget Specialist Practice Test

CBS Budget Development & Forecasting 3