Tag: public expenditure and public revenue

Questions Related to public expenditure and public revenue

Price earning ratio and price by cash flow ratio are classified as ________________.

commercial studies budgeting meaning, comparison, types, utility and limitations of budgets public finance, budget and fiscal policy public expenditure and public revenue

  1. Marginal ratios

  2. Equity ratios

  3. Return ratios

  4. Market value ratios

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Correct Option: D
Explanation:

The price-to-cash flow (P/CF) ratio is a stock valuation indicator or multiple that measures the value of a stock's price relative to its operating cash flow per share. The ratio uses operating cash flow which adds back non-cash expenses such as depreciation and amortization to net income.

In a normal accounting period, allocated amount of indirect cost is 2000 and actual a mount is 2000 and actual amount is 2200, then this is classified as ___________________.

commercial studies budgeting meaning, comparison, types, utility and limitations of budgets public finance, budget and fiscal policy public expenditure and public revenue

  1. Over allocated budget

  2. Under allocated budget

  3. Under allocated indirect cost

  4. Over allocated direct cost

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Correct Option: A
Explanation:

In a normal accounting period, allocated amount of indirect cost is $2000 and actual amount is $2200, then this is classified as over allocated budget because allocated amount is less than actual amount.

Sales expenditure budget is prepared by estimating the expense(s) of _________________.

commercial studies budgeting meaning, comparison, types, utility and limitations of budgets public finance, budget and fiscal policy public expenditure and public revenue

  1. Advertisement

  2. Market analysis

  3. Salesman's salary

  4. All of the above

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Correct Option: D
Explanation:

Sales expenditure budget is prepared by estimating the expense(s) of Advertisement, Market analysis and Salesman's salary.

_________ determines the priorities of functional budget.

commercial studies budgeting meaning, comparison, types, utility and limitations of budgets public finance, budget and fiscal policy public expenditure and public revenue

  1. Principal Budget Factor

  2. Limiting Factor

  3. Both (A) and (B)

  4. None of the above

Show answer
Correct Option: C
Explanation:

The principal budget factor is the factor that limits the activities of functional budgets of the organisation. The early identification of this factor is important in the budgetary planning process because it indicates which budget should be prepared first. In general sales volume is the principal budget factor.

The principle that the factor (such as a particular nutrient, water, or sunlight) that is in shortest supply (the limiting factor) will limit the growth and development of an organism or a community.

In capital budgeting, a negative net present value results in _______________.

commercial studies budgeting meaning, comparison, types, utility and limitations of budgets public finance, budget and fiscal policy public expenditure and public revenue

  1. Zero economic value added

  2. Percent economic value added

  3. Negative economic value added

  4. Positive economic value added

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Correct Option: C
Explanation:

Economic value added is the incremental difference in the rate of return over a company's cost of capital. In essence, it is the value generated from funds invested in a business. If the economic value added measurement turns out to be negative, this means that management is destroying the value of the funds invested in a business

The difference between fixed and variable cost has a special significance in the preparation of _______________.

commercial studies budgeting meaning, comparison, types, utility and limitations of budgets public finance, budget and fiscal policy public expenditure and public revenue

  1. Cash budget

  2. Functional budget

  3. Master budget

  4. Flexible budget

Show answer
Correct Option: D
Explanation:

Flexible budget is a budget that changes as per the activity level or production of units. Fixed budget is static and doesn't change at all. Flexible budget, on the other hand, is adjustable as per the necessity of the business. Fixed budget is always fixed.

The fixed-variable cost classification has a special significance in the preparation of Flexible budgets.

The budget that is prepared first is _______________.

commercial studies budgeting meaning, comparison, types, utility and limitations of budgets public finance, budget and fiscal policy public expenditure and public revenue

  1. Budget for the key factor

  2. Cash budget

  3. Master budget

  4. Flexible budget

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Correct Option: A
Explanation:

Firstly, determine the principal budget factor. This is also known as the key budget factor or limiting budget factor and is the factor which will limit the activities of an undertaking. This limits output, e.g. sales, material or labour.

A system by which budgets are used as a means of planning and controlling all aspects of a business is called _____________.

commercial studies budgeting meaning, comparison, types, utility and limitations of budgets public finance, budget and fiscal policy public expenditure and public revenue

  1. Programme

  2. Budget Manual

  3. Budgetary control

  4. Budget period

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Correct Option: C
Explanation:

Budgetary control is a system of procedures used to ensure that an organization's actual revenues and expenditures adhere closely to its financial plan.

Budget is a projection of ________________.

commercial studies budgeting meaning, comparison, types, utility and limitations of budgets public finance, budget and fiscal policy public expenditure and public revenue

  1. Cost accounts

  2. Financial accounts

  3. Management accounts

  4. Corporate accounts

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Correct Option: B
Explanation:

Financial Projections – “A forecast of future revenues and expenses for a business, organization, or country. 

Budget – “An estimate of costs, revenues, and resources over a specified period, reflecting a reading of future financial conditions and goals.”

Sales budget is a _______________.

commercial studies budgeting meaning, comparison, types, utility and limitations of budgets public finance, budget and fiscal policy public expenditure and public revenue

  1. Master budget

  2. Expenditure budget

  3. Functional budget

  4. Cash budget

Show answer
Correct Option: C
Explanation:

A functional budget for the manufacture of a product line might include estimated costs of production, marketing, sales, labor, equipment and materials, as well as projected sales income.