5.What information do you need to analyse prior to drafting a budget?

(a)Previous figures and variances.

(b)Previous experience of the person preparing the budget.

(c)Employee records and rosters.

(d)Supplier agreements.

6.What is the most reliable way to estimate income and expenditure?

(a)Refer to previous financial reports and ensure they're supported with valid, reliable and relevant information.

(b)Speak to other managers and co-workers and calculate an average based on their estimates.

(c)Conduct industry research to calculate standard income and expenditure rates expected in your type of business.

(d)Use your experience and prior knowledge to set realistic income and expenditure goals for your team or department.

7.What must you always keep in mind when drafting a budget?

(a)The total profit you want to make.

(b)Organisational objectives.

(c)How many hours it takes to complete the budget.

(d)The benefits of using a paper-based record keeping system.

8.What format do you use to clearly present information comparing sales budget targets for the next 12 months for each department within the organisation?

(a)Formal written report.

(b)Verbal presentation.

(c)Hands-on workshop.

(d)Graphical presentation.

9.You've prepared a draft budget based on your analysis of all available information. Why do you circulate the draft budget to colleagues and managers prior to a budget meeting?

(a)It creates a feeling of participation and involvement amongst the team so they are more likely to take on ownership of budget outcomes.

(b)It allows time to assimilate and evaluate the information and provide input.

(c)It allows time for sections to be recalculated based on changes to pricing structures, environmental factors or wage rises.

(d)Managers can begin preparing budgets for their work area for presentation at the budget meeting.

10.What should you do before finalising the draft budget?

(a)Use your teamwork skills to negotiate the budget in consultation with colleagues.

(b)Make sure you've not overlooked the opportunity to delegate the responsibility to someone else.

(c)Use your problem-solving skills to make several revisions before finalising any figures.

(d)Make sure the budget results in a net profit.

11.After consulting with colleagues, which modifications are you likely to incorporate before finalising the budget.

(a)Agreed modifications that are likely to foster better working relationships amongst team members regardless of budget results.

(b)Modifications that result in quick and easy profits for the work section or organisation.

(c)Only modifications that everyone within the affected team or every department agrees on.

(d)Agreed modifications that are viable, achievable and likely to enhance the performance of the budget.

12.How and when should a budget be finalised?

(a)As quickly as possible in a format that you're familiar with.

(b)In a clear format within designated timelines.

(c)In teams of two or more people.

(d)Online or in consultation with an accountant.

13.What information needs to be communicated to those responsible for implementing and administering the budgets?

(a)How the budgets will be distributed to others within the organisation.

(b)Any communication between the general manager and head office relating to budget targets.

(c)Previous draft budgets to assist in the understanding of why specific targets have been set.

(d)Reporting and financial responsibilities for their area of control.

14.Why are forecasted budget and actual figures compared regularly throughout, and at the end of, the budget period?

(a)To make sure the budget figures are accurate.

(b)So managers can change the budget figures to make sure they are not under or over budget at the end of the period.

(c)To evaluate performance and determine if operational changes need to be made.

(d)To evaluate the efficiency of the budget planning process.

15.What types of financial commitments are included in budgets?

(a)Financial business goals and mission statements.

(b)Debts, utilities, food and beverage purchases.

(c)Weekly staff rosters and food and beverage purchase orders.

(d)Income gained from investments and distributed to shareholders.

16.The size of the variance and the cost of the investigation are two factors to consider when deciding if a deviation is significant and worth further investigation. What other factor should you consider?

(a)Regularity of the variance.

(b)Variances over $5,000.

(c)Number of customers affected.

(d)The establishment's reputation.

17.Essential equipment has broken down and is likely to result in higher payroll costs and maintenance expenses. What should you do?

(a)Order new equipment and allocate the cost to the next reporting period.

(b)Analyse the likely impact and modify budgets where required.

(c)Calculate expected costs and deduct from the final figure in the cash flow budget.

(d)Make roster changes to ensure payroll costs are kept to a minimum.

18.Why is it important to record information for future budget preparation?

(a)It helps staff understand why budgets are necessary.

(b)Managers can use the information to duplicate the current budget if it is lost.

(c)It can assist in planning more achievable and realistic budget targets.

(d)Companies can understand why they are not meeting expected targets.