Budgets Quiz by Shubhrata Shrestha | Sep 2, 2025 | 0 comments Budgets Quiz 1. Which of the following best defines a cost centre? A. A department responsible for generating revenue B. A department that incurs costs but does not generate revenue C. A division that handles profit-sharing D. A business unit that manages cash flows None 2. What does a profit centre primarily focus on? A. Tracking costs only B. Controlling expenses without revenue responsibility C. Generating revenue and managing costs D. Avoiding budget variances None 3. Which formula is used to calculate variance? A. Budgeted Figure − Actual Figure B. Actual Figure − Budgeted Figure C. Revenue ÷ Cost D. Budgeted Revenue + Budgeted Costs None 4. A favourable variance occurs when: A. Actual revenue is lower than budgeted B. Actual costs are higher than budgeted C. Actual revenue is higher or costs are lower than budgeted D. Variances are not reported None 5. Which of the following is NOT an advantage of budgeting? A. Better financial control B. Improved coordination between departments C. Motivates managers through clear targets D. Guarantees higher profits None 6. One major disadvantage of cost and profit centres is: A. They improve accountability B. They simplify indirect cost allocation C. They may create misleading departmental profits D. They encourage benchmarking None 7. What is the primary purpose of budgets in decision-making? A. To calculate taxes B. To provide financial plans and control spending C. To increase internal competition D. To set shareholder dividend policies None 8. Which of the following is an example of a profit centre? A. Customer service department B. Human resources C. Sales division D. Maintenance team None 9. Why is variance analysis important? A. It tracks employee performance B. It highlights differences between planned and actual results C. It calculates total profits directly D. It measures shareholder value None 10. Which of the following is a limitation of budgeting? A. Improves decision-making B. Ensures future financial planning C. Time-consuming preparation and inflexibility D. Enhances coordination between departments None Time's up Submit a Comment Cancel replyYour email address will not be published. Required fields are marked *Comment * Name * Email * Website Save my name, email, and website in this browser for the next time I comment. Δ
