- 1 Marks
Question
What is the difference between a budget and a forecast?
A. They mean the same and they are used interchangeably
B. A budget is for internal use while a forecast is for external use
C. A budget is qualitative while a forecast is quantitative
D. A budget is a plan whereas a forecast is the actual
E. A budget is a plan of where a business wants to go while a forecast is the indication of where it is actually going
Answer
E. A budget is a plan of where a business wants to go while a forecast is the indication of where it is actually going
Explanation: A budget is a financial plan that outlines the expected outcomes for a business over a future period, while a forecast is a projection based on current trends and actual results to predict where the business is heading. The correct answer is “E” because it clearly differentiates the future-oriented nature of budgets from the projection aspect of forecasts.
- Tags: Budgeting, Forecasting
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