Budgeting & Forecasting Flashcards
6 cards from real CAA practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 Budgeting & Forecasting flashcards as text
What is the primary purpose of budgeting in financial management?
Answer: To plan and allocate financial resources
Budgeting helps organizations plan and allocate financial resources to achieve their financial goals.
What is the difference between budgeting and forecasting?
Answer: Budgeting sets financial targets, while forecasting predicts future performance
Budgeting sets planned financial targets, while forecasting predicts future financial performance based on historical data.
Which budgeting method involves adjusting expenditures based on current revenue levels?
Answer: Flexible budgeting
Flexible budgeting allows for adjustments in expenditures based on actual revenue performance.
What is zero-based budgeting?
Answer: A budgeting method that starts from zero and requires justification for all expenses
Zero-based budgeting requires justifying all expenses from scratch rather than using previous budgets as a base.
Which forecasting method uses historical data to predict future financial outcomes?
Answer: Time series analysis
Time series analysis is a forecasting technique that examines historical data to predict future trends.
Why is variance analysis important in budgeting?
Answer: To compare actual results with budgeted amounts and identify discrepancies
Variance analysis compares actual financial results with budgeted amounts to identify discrepancies and improve planning.