The Difference Between a Budget and a Standard Is That

question 210

Multiple Choice

The difference between a budget and a standard is that

• A) a budget expresses what costs were while a standard expresses what costs should be.
• B) a budget expresses management's plans while a standard reflects what actually happened.
• C) a budget expresses a total amount while a standard expresses a unit amount.
• D) standards are excluded from the cost accounting system whereas budgets are generally incorporated into the cost accounting system.

---

Definitions:

Risky Decisions

Choices or judgments made under conditions of uncertainty that have the potential to result in significant loss or gain.

Capital Investment Analysis

The process of evaluating and comparing potential expenditures or investments that are significant in amount to determine the best course of action.

Capital Budgeting

The process of evaluating and selecting long-term investments that are in line with the goal of a business's growth and financial stability.

Net Present Value Method

A method used in capital budgeting to assess the profitability of an investment, calculating the difference between the present value of cash inflows and outflows over a period of time.