Budgetary Interview Preparation Guide Download PDF
Budgetary frequently Asked Questions by expert members with experience in Budgetary. These questions and answers will help you strengthen your technical skills, prepare for the new job test and quickly revise the concepts
22 Budgetary Questions and Answers:
1 :: Can you please explain the difference between fixed and flexible budgets?
1. A fixed budget is established for a specific level of activity whereas flexible budget is prepared for various levels of activity.
2. Fixed budget cannot be changed after the period commences, whereas a flexible budget can be changed after the period commence.
3. Fixed budget is more suitable for fixed expenses whereas flexible budget takes both fixed as well as variable expenses in account.
4. Fixed budget includes only fixed costs, whereas a flexible budget includes fixed costs, variable costs and semi variable costs.
5. Fixed budget is mainly used in planning stage whereas flexible budget is used in controlling stage.
2. Fixed budget cannot be changed after the period commences, whereas a flexible budget can be changed after the period commence.
3. Fixed budget is more suitable for fixed expenses whereas flexible budget takes both fixed as well as variable expenses in account.
4. Fixed budget includes only fixed costs, whereas a flexible budget includes fixed costs, variable costs and semi variable costs.
5. Fixed budget is mainly used in planning stage whereas flexible budget is used in controlling stage.
2 :: What is Budgetary Control?
Budgetary Control is a methodical control technique whereby budgets are prepared relating the responsibilities of budget holders. It is a continuous comparison of actual results with budgeted results, to ensure that the objectives of the company’s policy are achieved; or to provide a basis for the change of those objectives. In simple terms, it is the analysis of the plans which the organisation has made; what was the result when those plans were implemented practically. After practical implementation of the budget if any variation is seen in the actual result to the budget result then the reasons for the variations are fount out and corrective actions are taken to correct variations.
3 :: What are Budgetary Control characteristics?
Following are the characteristics of Budgetary control:
-It deals with the establishment of the budgets.
-A control technique where actual results are extracted from the organisation’s operations and compared with the budget prepared.
-Any differences or variations are computed and made the responsibility of key individual who can either take actions for maintain the favourable variations or revise the budgets.
-It deals with the establishment of the budgets.
-A control technique where actual results are extracted from the organisation’s operations and compared with the budget prepared.
-Any differences or variations are computed and made the responsibility of key individual who can either take actions for maintain the favourable variations or revise the budgets.
4 :: Explain what are the pre-requisites to implement Budgetary Control?
Following are the pre-requisites to implement Budgetary Control:
-First a Budget Centre which is that section of the organisation for which the budget will be prepared should be clearly defined.
-Budget Period or the time period for which the budget will be prepared and operated should be decided carefully. It should neither be too long nor too short.
-An efficient and proper system of accounting should be established so that the information required for the proper implementation for the budgetary control can be available on time.
-A proper organisational chart should be prepared properly, clearly depicting the responsibilities and duties of each level of executive.
-A budget manual, an important document in relation to the budgetary control. It should be well written, indexed and divided into sections. It should include principles and objectives of budgetary control, duties and responsibilities of each executive in the organisation, accounts codes, budget diagrams, etc.
-A budget key factor should be assessed before preparing other functional budgets to ensure that other functional budgets are capable of fulfilment.
-First a Budget Centre which is that section of the organisation for which the budget will be prepared should be clearly defined.
-Budget Period or the time period for which the budget will be prepared and operated should be decided carefully. It should neither be too long nor too short.
-An efficient and proper system of accounting should be established so that the information required for the proper implementation for the budgetary control can be available on time.
-A proper organisational chart should be prepared properly, clearly depicting the responsibilities and duties of each level of executive.
-A budget manual, an important document in relation to the budgetary control. It should be well written, indexed and divided into sections. It should include principles and objectives of budgetary control, duties and responsibilities of each executive in the organisation, accounts codes, budget diagrams, etc.
-A budget key factor should be assessed before preparing other functional budgets to ensure that other functional budgets are capable of fulfilment.
5 :: Explain sales budget?
Sales budget is the budget of total sales expressed in terms of quantity or money. It is the between two factors i.e. sales quantity and selling price.
6 :: What factors are taken into consideration while preparing sales budget?
Following factors are taken into consideration while forecasting for sales quantity:
-Analysis of Past Trend
-Reports by Salesmen
-Market Research and Market Survey
-General Economic Conditions
Following factors are taken into account while forecasting for selling price:
-Cost price of the product
-Expected amount of profits
-Selling price charged by the competitors
-Advertisement and sales promotion techniques used by the company.
-Analysis of Past Trend
-Reports by Salesmen
-Market Research and Market Survey
-General Economic Conditions
Following factors are taken into account while forecasting for selling price:
-Cost price of the product
-Expected amount of profits
-Selling price charged by the competitors
-Advertisement and sales promotion techniques used by the company.
7 :: What is a purchase budget? What things are considered before preparing purchase budget?
Purchase budget is a forecast of quantity and value of materials required to purchase during the budget period. This budget is closely connected to the production budget. Following points are required to be considered before preparing the purchase budget:
-Opening and Closing balances of stocks
-Materials purchased and reserved for specific purpose
-Orders already placed
-Quantity required by the production
-Prices of materials.
-Storing facilities and Economic order quantity.
-Availability of funds
-Opening and Closing balances of stocks
-Materials purchased and reserved for specific purpose
-Orders already placed
-Quantity required by the production
-Prices of materials.
-Storing facilities and Economic order quantity.
-Availability of funds
8 :: Explain what role does budgetary control play in cost control? What are the requirements for its successful implementation?
Budgetary Control is establishment of budgets and the continuous comparison of actual results with the planned results. It computes the variances and after that management takes necessary actions to maintain favourable variations, through revision of the budgets.
Following are the requirements for the successful implementation of Budgetary Control:
-First a Budget Centre which is that section of the organisation for which the budget will be prepared should be clearly defined.
-Budget Period or the time period for which the budget will be prepared and operated should be decided carefully. It should neither be too long nor too short.
-An efficient and proper system of accounting should be established so that the information required for the proper implementation for the budgetary control can be available on time.
-A proper organisational chart should be prepared properly, clearly depicting the responsibilities and duties of each level of executive.
-A budget manual, an important document in relation to the budgetary control. It should be well written, indexed and divided into sections. It should include principles and objectives of budgetary control, duties and responsibilities of each executive in the organisation, accounts codes, budget diagrams, etc.
-A budget key factor should be assessed before preparing other functional budgets to ensure that other functional budgets are capable of fulfilment.
Following are the requirements for the successful implementation of Budgetary Control:
-First a Budget Centre which is that section of the organisation for which the budget will be prepared should be clearly defined.
-Budget Period or the time period for which the budget will be prepared and operated should be decided carefully. It should neither be too long nor too short.
-An efficient and proper system of accounting should be established so that the information required for the proper implementation for the budgetary control can be available on time.
-A proper organisational chart should be prepared properly, clearly depicting the responsibilities and duties of each level of executive.
-A budget manual, an important document in relation to the budgetary control. It should be well written, indexed and divided into sections. It should include principles and objectives of budgetary control, duties and responsibilities of each executive in the organisation, accounts codes, budget diagrams, etc.
-A budget key factor should be assessed before preparing other functional budgets to ensure that other functional budgets are capable of fulfilment.
9 :: Do you know what is Budget?
A budget is a financial document or an action plan which is prepared and used to project future income and expenses. It outlines an organisation’s financial and operational goals. It can also include non- monetary information with the monetary information. They need to be made and approved in advance of the year in which they are to be used or implemented.
10 :: What are Budget characteristics?
Following are the characteristics of a good budget:
-It is expressed in quantitative or monetary terms.
- It is prepared for a fixed period of time It is prepared before the period in which it commences.
-Practical to implement.
-It spells out the objects and the policies to be pursued in order to achieve the objective of the organisation.
-Many people are involved in drawing up a budget.
-Flexible enough to allow changes in the changing environment.
-Prepared on the basis of established standards of performance.
-Analysis of cost and revenues.
-On the basis of budget report performance of the organisation is constantly monitored.
-It is expressed in quantitative or monetary terms.
- It is prepared for a fixed period of time It is prepared before the period in which it commences.
-Practical to implement.
-It spells out the objects and the policies to be pursued in order to achieve the objective of the organisation.
-Many people are involved in drawing up a budget.
-Flexible enough to allow changes in the changing environment.
-Prepared on the basis of established standards of performance.
-Analysis of cost and revenues.
-On the basis of budget report performance of the organisation is constantly monitored.