CFC Budgeting & Forecasting

Question 1

What is the main purpose of a budget?

Accepted Answer

To allocate financial resources effectively

Answer

To predict future profits

Answer

To increase spending

Answer

To minimize taxes

Question 2

What is the difference between fixed and variable costs?

Accepted Answer

Fixed costs are more predictable, variable costs fluctuate with output

Answer

Fixed costs change with production, variable costs remain constant

Answer

Fixed costs are higher than variable costs

Answer

There is no difference

Question 3

What is a rolling forecast?

Accepted Answer

A constantly updated forecast

Answer

A forecast done once a year

Answer

A forecast for fixed costs

Answer

A forecast that ignores past performance

Question 4

What is the purpose of variance analysis in budgeting?

Accepted Answer

To compare actual results to budgeted expectations

Answer

To increase costs

Answer

To forecast future spending

Answer

To predict future revenues

Question 5

What is zero-based budgeting?

Accepted Answer

Starting each period from zero, justifying all expenses

Answer

Allocating a fixed percentage increase each year

Answer

Based on historical data

Answer

Focusing only on fixed costs

Question 6

What is the role of a financial controller in forecasting?

Accepted Answer

Ensure accurate and realistic forecasts

Answer

Make investment decisions

Answer

Generate marketing strategies

Answer

Prepare the final financial report

Question 7

What is the difference between static and flexible budgeting?

Accepted Answer

Flexible budgets adjust to activity levels, static budgets do not

Answer

Static budgets adjust to actual activity

Answer

Static budgets are more accurate than flexible budgets

Answer

Flexible budgets only account for fixed costs

Question 8

How do financial controllers help in cost control?

Accepted Answer

They track, monitor, and control costs

Answer

They approve all expenses

Answer

They create marketing plans

Answer

They focus only on financial reporting

Question 9

What does the term 'budget variance' refer to?

Accepted Answer

The difference between actual results and budgeted figures

Answer

The difference between actual costs and forecasted profits

Answer

The sum of fixed costs

Answer

A method of expense forecasting