B. The rigid adherence to the budget without recognizing changing conditions.

C. Top management involvement in support of the budget.

D. The opportunity budgeting gives to risk-taker managers for department growth.

12. A variant of fiscal-year budgeting whereby a twelve-month projections into the future is maintained at all
times:
A. Forecasting. C. Continuous budgeting.
B. Zero-based budgeting. D. Calendar budgeting.

35. The method of budgeting which adds one month’s budget to the end of the plan when the current month’s
budget is dropped from the plan refers to
A. Long-term budget C. Incremental budget
B. Operations budget D. Continuous budget

27. A continuous budget

A. is a budget that is revised monthly or quarterly.
B. is a medium term plan that consists of more than 2 years’ projections.
C. is appropriate only for use of a not-for-profit entity.
D. works best for an entity that can reliably forecast events a year or more into the future.

37. “Incremental budgeting” refers to

A. line-by-line approval of expenditures
B. setting budget allowances based on prior year expenditures
C. requiring top management approval of increases in budgets
D. using incremental revenues and costs in budgeting

49. A budget plan for annual fixed costs that arises from top management decisions directly reflecting corporate
policy.
A. Flexible budget. C. Discretionary budget.
B. Static budget. D. Program budget.

36. The term “decision package” relates to

A. comprehensive budgeting C. program budgeting
B. zero-based budgeting D. line budgeting

41. The budget approach that is more relevant when the continuance of an activity or operation must be justified
on the basis of its need or usefulness to the organization.
A. the incremental approach C. the baseline approach
B. the zero-based approach D. both a and b are true

11. The process of developing budget estimates by requiring all levels of management to estimate sales,
production, and other operating data as though operations were being initiated for the first time is referred to
as:
A. Forecasting. C. Continuous budgeting.
B. Zero-based budgeting. D. Program budgeting.

38. Which of the following is a contemporary approach to budgeting?

A. incremental approach C. baseline approach
B. zero-based approach D. both a and b are true

51. Zero-base budgeting requires managers to

 A. Justify expenditures that are increases over the prior period’s budgeted amount.
B. Justify all expenditures, not just increases over last year’s amount.
C. Maintain a full-year budget intact at all times.
D. Maintain a budget with zero increases over the prior period.

13. Zero-based budgeting:

A. involves the review of changes made to an organization’s original budget.
B. does not provide a summary of annual projections.
C. involves the review of each cost component from a cost/benefit perspective.
D. emphasizes the relationship of effort to projected annual revenues.

18. A systematized approach known as zero-based budgeting:

A. Classifies the budget by the prior year’s activity and estimates the benefits arising from each activity.
B. Commence with either the current level of spending or projected whichever is lower.
C. Presents planned activities for a period of time but does not present a firm commitment.
D. Divides the activities of individual responsibility centers into a series of packages that are prioritized.

20. Which of the following statements about Zero-based budgeting is incorrect?

A. All activities in the company are organized into break-up units called packages.
B. All costs have to be justified every budgeting period.
C. The process is not time consuming since justification of costs can be done as a routine matter.
D. Zero-based budgeting includes variable costs only.

34. Budgeting expenditures by purpose is called