The one serious limitation of fixed budgets is:
a. information technology has not been able to play a part in fixed budgets.
b. fixed budgets are very difficult and expensive to manage.
c. they don't provide managers with goals for financial performance that can be measured each accounting period.
d. they don't have enough flexibility to be responsive to changes in the volume of work that needs to be done.
Q. 2Another term for fixed budgets is:
a. accounting budgets.
b. static budgets.
c. refined budgets.
d. flexible budgets.
Q. 3Advantages of zero-base budgets include:
a. they are very economical for any size organization but especially low cost for large bureaucracies.
b. they force managers to avoid biases when selecting which projects should be funded.
c. they are very easy to prepare, freeing management for other tasks.
d. they force organizations to examine their structures and processes in order to eliminate waste and redundancy.
Q. 4Which of the following is NOT true regarding zero-base budgets?
a. A zero-base budget assumes that every budgeted item is subject to scrutiny.
b. Health care organizations are primary users of this budgeting technique.
c. Zero-base budgets have been gaining wide spread acceptance since the 1970s.
d. Zero-base budgets work well in start-up companies and high-tech industries.
Q. 5Advantages to an incremental budget include:
a. it is responsive to change.
b. it encourages innovation.
c. it exposes inefficiencies.
d. it is relatively easy to prepare.
Q. 6Which of the following is true regarding an incremental budget?
a. Incremental budget allocations remain the same year after year.
b. An incremental budget projects when funds will become available and where they can be spent.
c. An incremental budget is based on the previous year's budget.
d. An incremental budget is set according to the manager's needs.
Q. 7Accounting periods may be which of the following?
a. a calendar year
b. a fiscal year
c. a calendar month
d. every 2 years
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