SITXFIN501 Prepare and monitor budgets
Assessment 1 - Questions
INSTRUCTIONS
Please complete the student details section.
This short answer assessment is one form of assessment that is used to collect evidence of competency for this unit.
To demonstrate competence you must correctly answer all questions. Any shortfalls or wrong responses may be followed up by your trainer in verbal, written or practical instance.
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Student Details
Name: _______________________________________________________
Student Number: _________________________ Date: ______________
Questions
Question 1: Name 2 business considerations you might consider when researching a budget.
Question 2: Name 5 sources of data you might use for budget preparation.
Question 3: Name 2 internal factors that can impact on budgets.
Question 4: Name 2 external factors that can impact on budgets.
Question 5: How does involving staff “from the bottom up” in the budgeting process, help the business?
Question 6: What does the process of preparing a draft budget usually involve?
Question 7: How does breaking the budget down into groups, departments, or income and expense categories help colleagues?
Question 8: Name 2 people (job roles) you would circulate the draft budget to for feedback or approval.
Question 9: The budgeting process requires strong negotiation skills. Why is it important to convince staff of the achievability of the budget?
Question 10: A staff member suggests a change or alteration to the budget. List 3 aspects you
need to consider to ensure any changes would have no negative impacts:
Question 11: In most businesses/industries, when must the budget be complete?
Question 12: What information should department managers include in their monthly reports?
Question 13: How often should the budget be compared to the actual accounting results.
Question 14: Name 3 financial reports you might generate from your accounting system to
check your budget against actual income or expenditure?
Question 15: Every revenue and expense item on the Profit and Loss Statement should be
compared to what?
Question 16: When revenue variances occur, why is talking to staff a good way to help
identify and find options to address the issue?
Question 17: List 3 factors that can cause variances in staff budgets.
Question 18: Why is monitoring your budget progressively throughout the year so important?
Question 19: How can you collect information to help create future budget plans?
Question 20: Name an accounting program you can use to help manage budgets.

Question 21: List 4 different types of budgets.
END OF ASSESSMENT

SITXFIN501 Prepare and monitor budgets - Answer Guide
Assessment 1 - Questions
Questions
Question 1: Name 2 business considerations you might consider when researching a budget.
Answer may include (but not limited to):
• The historical performance of the business
• Competitors’ offerings and price levels
• Management’s view of the future
• Departmental views and issues
• Organisational goals
Question 2: Name 5 sources of data you might use for budget preparation.
Answer may include (but not limited to):
• Performance data from a previous period.
• Financial proposals from key stakeholders.
• Financial information from suppliers.
• Customer research.
• Competitor research.
• Management policies and procedures.
• Organisation budget preparation guidelines.
• Declared commitments in given areas of operation.
• Grant funding guidelines or limitations.
• Commonwealth Grants.
Question 3: Name 2 internal factors that can impact on budgets.
Answer may include (but not limited to):
• Business objectives
• Management restructures
• Human Resource requirements (adding extra staff)
• New projects

Question 4: Name 2 external factors that can impact on budgets.
Answer may include (but not limited to):
• Legislation and regulation changes
• Economics
• Market trends
• External venue costs
Question 5: How does involving staff “from the bottom up” in the budgeting process, help the business?
The bottom-up approach ensures that all staff are involved in the preparation of the budget, which means they will work harder to achieve the budget than they would if it were just handed down by management using a top-down approach.
Question 6: What does the process of preparing a draft budget usually involve?
Entering all the projected income, expenses, purchases, staffing requirements, etc into a spreadsheet or accounting program
Question 7: How does breaking the budget down into groups, departments, or income and
expense categories help colleagues?
Answer may include (but not limited to):
It helps colleagues to
• Read and understand the budget information
• Filter out irrelevant data
• Analyse the effect of projected expenses and revenue on their department
Question 8: Name 2 people (job roles) you would circulate the draft budget to for feedback or
approval:
Answer may include (but not limited to):
• Budget Committee
• Owners
• Upper management
• Managers of each department
• Staff

Question 9: The budgeting process requires strong negotiation skills. Why is it important to
convince staff of the achievability of the budget?
If staff are positive about the budget, they are more likely to support it and do their best to work towards the targets that have been set.
Question 10: A staff member suggests a change or alteration to the budget. List 3 aspects you
need to consider to ensure any changes would have no negative impacts:
Answer may include (but not limited to):
• Whether the additional costs are justified.
• The effect of the costs on the bottom line.
• Potential service provision issues.
Question 11: In most businesses/industries, when must the budget be complete?
Usually by the end of the financial year, for the next financial year.
Question 12: What information should department managers include in their monthly reports?
Any budget variances as well as an overall picture of the running of the department.
Question 13: How often should the budget be compared to the actual accounting results?
Usually monthly
Note to trainer: This may be department or industry specific.
Question 14: Name 3 financial reports you might generate from your accounting system to
check your budget against actual income or expenditure?
Answer may include (but not limited to):
• Profit and Loss Statement
• Balance Sheet
• Cashflow Statement
• Departmental Reports
• Sales Report
• Budget vs Actual
• Etc.

Question 15: Every revenue and expense item on the Profit and Loss Statement should be
compared to what?
The budgeted figure.
Question 16: When revenue variances occur, why is talking to staff a good way to help
identify and find options to address the issue?
Often the staff on the front line will have more of an idea of the reasons for the variance and will be able to give suggestions for improvement.
Question 17: List 3 factors that can cause variances in staff budgets.
Answer may include (but not limited to):
• Skills of the manager in rostering
• Efficiency of staff
• Staff on unplanned leave, sick leave etc.
• Using too much casual labour
• Extra demand requiring extra staff
• Needing to ‘pay out’ a staff member who leaves
Question 18: Why is monitoring your budget progressively throughout the year so important?
So that you can catch any variances in time. If you do not realise that there are issues early enough, then you will not be able to adjust your strategies to compensate.
Question 19: How can you collect information to help create future budget plans?
Reports are produced by the business over a certain amount of time, the information can be used to analyse the performance of the business over time and assist in creating future budgets.
Question 20: Name an accounting program you can use to help manage budgets.
Answer may include (but not limited to):
• Xero
• MYOB
• Cashwhiz
• Quickbooks
Question 21: List 4 different types of budgets.
Answer may include (but not limited to):
• Master budget
• Cashflow budgets
• Departmental budgets
• Wage budgets
• Project budgets
• Events budgets
• Sales budgets
• Purchasing budgets
• Capital expenditure