Financial Management and Budgeting Flashcards

Which budgeting approach requires all expenses to be justified from zero each budget period, rather than using the prior period as a baseline?

Answer: Zero-based budgeting

Zero-based budgeting starts from a zero baseline each period, requiring justification for every expenditure.

An administrative professional submits an expense report that includes a non-reimbursable personal charge. According to standard expense policy, what should happen?

Answer: The personal charge is removed and the remainder is processed

Standard expense policy removes non-reimbursable items and processes the remaining valid expenses.

Which financial document summarizes revenues, expenses, and net income over a specific period?

Answer: Income statement (P&L)

An income statement (profit and loss statement) reports revenues and expenses over a period to show net income or loss.

What is petty cash used for in an office environment?

Answer: Covering small, incidental day-to-day office expenses

Petty cash is a small reserve fund used to pay minor, routine expenses without issuing a formal check or payment.

A purchase order (PO) primarily serves to:

Answer: Authorize a vendor to deliver goods/services at agreed terms

A purchase order is a formal document authorizing a vendor to supply specified goods or services at agreed pricing and terms.

Which term describes the difference between actual spending and the planned budget amount?

Answer: Variance

Budget variance is the difference between the actual amount spent and the budgeted amount for a given line item.