In this article, we’ll learn the top 15 Questions and Answers- Budgetary Control. It will assist you in gaining a basic understanding of budgetary control.
It will also assist in the development of your accounting knowledge and expertise.
So let’s get started.
Questions and Answers- Budgetary Control
Question-01: What is budgetary control?
Answer: Budgetary control is a system for planning and controlling all aspects of producing and selling goods and services using a budget.
Question-02: What are the features of budgetary control?
Answer: The features of budgetary control are as follows:
- Establishment of the budget with the objective of implementing the plans
- Specifying the responsibility of the executives
- Implementation of the budget by the effort and action of the executives
- Variance analysis and taking corrective action.
Question-03: What are the objectives of budgetary control?
Answer: The objectives of budgetary control are as follows:
- Effective Control
- Decentralization of Authority
- Increasing Efficiency.
Question-04: What are the benefits of budgetary control?
Answer: the benefits of budgetary control are as follows
- Budgetary control helps improve in planning
- Corporate planning and budgetary control can be linked
- Performance indicators can be developed.
- Coordination and control are made easier.
- It follows the principle of consultative direction.
- The direction of Wasteful expenditure.
Question-05: What are the limitations or disadvantages of budgetary control?
Answer: The limitations or disadvantages of budgetary control or as follows:
- Dependence on assumptions
- Unsuitable in the changed situation
- Problem in implementation
- Lack of specialist
Question-06: What is the importance of budgetary control?
Answer: The importance of budgetary control is as follows:
- The main base of financial planning
- Increase in efficiency and reduction of wastage
- Helpful for achieving objective and goal helpful for coordination
- Helpful for delegation of authority.
Question-07: What are the prerequisites for the introduction of the budgetary control system?
Answer: the prerequisites of the introduction of the budgetary control system that follows:
- Taking initiative.
- Setting reasonable objective and goal
- Establishing responsibility control.
- Allocation of power and responsibility
- Proper communication and coordination.
- Constant vigilance
Question-08: What are the methods or steps in budgetary control?
Answer: The methods or steps in budgetary control are as follows:
- Establishment of a strong organization
- Organization chart
- Budget center
- Formation of the budget committee
- Preparation of budget
- Manual fixation of the budget period
- Fixation of the level of activity
- Determination of limiting or key factors
- The preparation of the budget and its implementation
- Preparation of budget report
- Variance analysis and
- Taking corrective action.
Question-09: What is a budget Centre?
Answer: Budget Centers are budgets that are created based on the department, subdivision, location, person, product or equipment of the organization.
Question-10: What is a budget period?
Answer: The period for which the budget is prepared is called the budget period. Budgets can be long-term or short-term.
Question-11: What is the budget manual?
Answer: A manual that clearly describes the budgetary responsibilities and duties of the organization and describes in detail how to perform the various functions is called a budget manual.
Question-12: What is the budget committee?
Answer: For the purpose of formulating the budget, a committee of budget directors, finance directors, budget officers, heads of functional departments, or heads of budget centers is formed. The name of this committee is the budget committee.
Question-13: What is the difference between the budget and the budgetary control?
Answer: the difference between budget and budgetary control are as follows:
- The budget is a numerical expression of future plans. Budgetary control, on the other hand, is the use of budgets as a control strategy or tool.
- The budget functions as a road map for managers who are responsible for achieving specific business goals. Budgetary control, on the other hand, quantifies and is financially oriented to guide the manager in achieving specific business objectives.
Question-14: How does budgetary control increase efficiency and reduce waste?
Answer: budgetary control increases the overall efficiency of the organization and reduces waste setting different standards and allocating responsibilities and duties among employees and officials.
Question-15: How does budgetary control help to earn a maximum profit?
Answer: Management efficiency is increased in the budgetary control system and effective control results in minimization of expenditure, waste and loss. As a result, it is possible for the organization to achieve maximum profit.
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