NPS Financial Management & Budgeting 1

Question 1

What is the primary purpose of a budget in an organization?

Accepted Answer

To plan and control financial resources

Answer

A budget serves as a financial plan that helps organizations allocate resources, set spending limits, and measure actual performance against targets.

Question 2

Which financial statement reports a company's revenues and expenses over a specific period?

Accepted Answer

Income statement

Answer

The income statement (also called the profit and loss statement) summarizes revenues, costs, and expenses to show net profit or loss over a reporting period.

Question 3

What does ROI stand for in a financial context?

Accepted Answer

Return on Investment

Answer

Return on Investment (ROI) measures the gain or loss generated on an investment relative to the amount of money invested.

Question 4

Variance analysis in budgeting is used to compare what?

Accepted Answer

Actual financial results against budgeted figures

Answer

Variance analysis identifies and explains the differences between planned budgeted amounts and actual financial results to support corrective action.

Question 5

What is a capital expenditure (CapEx)?

Accepted Answer

Money spent on acquiring or upgrading long-term assets

Answer

Capital expenditures are funds used by a company to acquire, upgrade, or maintain long-term physical assets such as equipment, buildings, or technology infrastructure.

NPS - National Performance Specialists Certification Practice Test

NPS - National Performance Specialists Certification Practice Test

NPS Financial Management & Budgeting 1