Q1. Indicate whether the following aspects which need to be considered when preparing a draft budget are true or false:

True False

1. To put a draft budget together the estimates you have made for revenue and expenses should be entered into the budget using the software available at your place of work.

2. The policies and procedures your organisation has for budget preparation do not need to be followed for draft budget preparation - only for final budget preparation.

3. Different businesses will have different requirements as to what can be done and when approval needs to be sought.

4. When entering the data, you should make sure you take into account the business's objectives for this financial year.

5. When making your estimates, you may have come up with a number of scenarios or options.

6. While some parts of the budget can be predicted fairly accurately, some parts of budgeting like competitor activities are out of your control; to analyse the likely impacts you could in "What-if analysis".

Q2. List 5 examples of people (job roles) you would circulate the draft budget to for feedback or approval:

Q3. What is the purpose of preparing financial and statistical reports?

Q4. What is meant by over or under budget? How does this affect a revenue or a expenditure budget, respectively?

Q5. The following factors need be considered for effective variance analysis and rectification:

True False

1. When the variances for each department have been identified, the finance team would complete general ledger printout to check whether there have been any errors in recording transactions.

2. Examples of such errors include entering an invoice twice, coding the invoice to the wrong expense, or entering a statement as an invoice.

3. If there are no such errors, a check should be done to make sure that only invoices for that period are included and if others have been included, the reason why.

4. If the budget variance is not due to a timing or accounting problem, it is likely that the expenditure has simply been too high.

5. Revenue variances can be more devastating to a business than expenditure variances as overhead expenses will exist regardless of the amount of revenue coming in.

6. If the budget for Rent expense is $10,000 per month or 15% of Total Revenue and revenue decreases by 10%, the business will not be impacted as the dollar amount of rent will still be the same, but the percentage will decrease.

Q6.List 5 examples of approaches which can be used in the TH&E industry to maximise budget performance in various departments:

Q7.What is the process for updating a budget? Which information would you collect?