Answer the following statements true (T) or false (F)

Question

1. Incremental budgeting allocates increased or decreased funds to a department by using the last budget period as a reference point; only incremental changes in the budget request are reviewed.
2. A variable budget can be adjusted over time to accommodate pertinent changes in the environment.
3. A balance sheet summarizes an organization's overall financial worth, or its assets and liabilities, at a specific point in time.
4. An income statement summarizes an organization's financial results over a specified period of time, such as a quarter or a year.

Answer 1

1. TRUE
Incremental budgeting allocates increased or decreased funds to a department by using the last budget period as a reference point; only incremental changes in the budget request are reviewed.
2. TRUE
A fixed budget allocates resources on the basis of a single estimate of costs. That is, there is only one set of expenses; the budget does not allow for adjustment over time. A variable budget allows the allocation of resources to vary in proportion with various levels of activity. That is, the budget can be adjusted over time to accommodate pertinent changes in the environment.
3. TRUE
A balance sheet summarizes an organization's overall financial worth, or its assets and liabilities, at a specific point in time.
4. TRUE
The income statement summarizes an organization's financial results, its revenues and expenses, over a specified period of time, such as a quarter or a year.