When Budgets Are Used for Control

question 5

Multiple Choice

When budgets are used for control,

• A)budgeted amounts from different years are compared.
• B)actual amounts from different years are compared.
• C)budgeted amounts are compared to actual amounts.
• D)none of these.

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Definitions:

Base Period

A specific time period against which conditions in other time periods are compared, often used in index numbers or to measure economic growth.

Estimated Period

A time frame within which certain financial projections or the useful life of an asset is expected to occur.

Vertical Analysis

A financial method that expresses each item in a financial statement as a percentage of a base figure from the same statement, typically used for income statements and balance sheets.

Liquidity

The ability of an asset to be quickly converted into cash without significant loss of value.