Question

Answer each question with a minimum of two to three (2-3) sentences. Some questions will require substantially more than that to fully respond to the prompt. Be thorough when addressing each item and make sure you answer each part of the prompt.

What is a budget?

What are the (six) benefits of having a budget?

What is a master budget? Describe its components.

What is a static planning budget?

What is a flexible budget?

How does a flexible budget differ from a static planning budget?

What are three reasons that actual results may differ from what had been budgeted for at the beginning of a period?

How does a flexible budget account for these variances?

Answer 1

1. Budget - Budget refers an estimated idea about income and expenditure for a particulatr time period.

2. Benefits of having a Budget -

1. Budget provide you decision making power that how your money will work.

2. Its allow to you save expected or unexpected cost.

3. Budget give you idea about the problems which will come in the business.

4. Budget helps you to identify if you can take loan and how much.

5. By budgeting you can produce extra revenue.

6. Budget keeps you focus on your financial goals.

3. Master budget - Master Budget is the head of the budget in other words we can say it is combined budget of all lover budget or small budgets.

Conponents of master budget - A . Opetational Budget B. Financial Budget

4. Static planning budget - static budget is a budget that remain same weather volume changes or not.