Dear Readers, Here we have given Practice English Reading Comprehension quiz and questions for SBI Clerk/PO 2018 Exams with detailed explanation. Candidates those who are preparing for Upcoming Bank Exams can make use of it.
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Direction (1-10): Read the passage carefully and answer the following questions.
A budget is a blueprint of plan of action to be followed during a specified period of time for the purpose of attaining a given objective.
According to CIMA Terminology, budget is “a plan quantified in monetary terms prepared and approved prior to a defined period of time, usually showing planned income to be generated and/or expenditure to be incurred during that period and the capital to be employed to attain a given objective”.
As a business owner or financial manager, it is imperative to understand how to prepare an annual budget for a company. Small and medium-sized companies often overlook budgeting optimization, but having a comprehensive budget will help you make important business decisions.
No matter what stage of growth your business is in, budgeting is important to its long-term success. A major factor of business planning is a financial plan or budget. A budget is essentially a future financial plan and forecast for a specific time-period. Budgets often use historical data to be formulated, which means that as a business grows and develops its budgets should become more accurate as it has more historical information to draw from.
A budget helps you to determine your activities for the time period specified. Of course no budget will ever be 100% accurate but it is still an essential tool for keeping track of sales and costs and knowing what to focus on – e.g. whether to increase marketing if sales are low, trim costs where they are too high, and so on. In essence, it works as a framework and control mechanism for your finances and cash flows.
Creating budget for the business is not simple task to do. There are various factors which should be taken care while drafting the budget. A good plan will assess the available resources within a business and be realistic about what’s achievable and what really matters, versus what might be nice to do.
The budgeting process should not be completed in an office by a member of the accounting or finance team. Instead, all of the departments within the company should be consulted. This includes the sales team who can assist with realistic revenue assessments, the manufacturing or service team who can advise on costs of delivery and any large purchases required to update machinery, the research & development team who can discuss expected costs as well as the timing on any new products anticipated, and so on.
On the other hand, expected sales have a significant influence on costs (including employee headcount), but can be very challenging to accurately project, so this part of information should also be considered while drafting the budget.
Once the expected revenue figures are estimated, the focus can move towards the expenses. Some expenses relate directly to revenue, whether they be inventory or employee services. Typically the gross margin of a business does not fluctuate substantially unless new products are developed, inventory pricing changes, or efficiencies are identified in the manufacturing process.
A SWOT analysis (strengths, weaknesses, opportunities and threats) is considered as a very important part of a budget plan. It’s rudimentary, but it allows you to think through the things impacting your business. SWOT analysis is a process that identifies an organization’s strengths, weaknesses, opportunities and threats. Specifically, SWOT is a basic, analytical framework that assesses what an entity can and cannot do, for factors both internal (the strengths and weaknesses) as well as external (the potential opportunities and threats).
Budgets help businesses in tracking and managing their resources. Businesses use a variety of budgets to measure their spending and develop effective strategies for maximizing their assets and revenues
A master budget is an aggregate of a company’s individual budgets designed to present a complete picture of its financial activity and health.
A master budget is an aggregate of a company’s individual budgets designed to present a complete picture of its financial activity and health. The Institute of Cost and Management Accountants, England defines master budget as the summary budget incorporating all the functional budgets, which is finally approved, adopted and applied. Thus, master budget is prepared by consolidating departmental or functional budgets.
The financial budget ensures that right types of funds are available whenever they are required. The aim of this budget is to manage the fund outflows with the fund inflows. The outflow is in the form of expenses and inflow is in the form of sales. Decisions like mergers and acquisitions depend on the financial budgets of the organizations. If the business has the desire to take over any company, its financial budget shall determine the value up to which the business can quote for acquiring another organization. In simple words, the financial budget describes the financial health of the business.
Cash flow budget is more about managing the working capital of the business. The cash flow budget determines whether the accounts payable and accounts receivable are dealt timely. It ensures that the inflow of the cash is regular and timely.
A static budget is a fixed budget that remains unaltered regardless of changes in factors such as sales volume or revenue.
An operating budget is a forecast and analysis of projected income and expenses over the course of a specified time period.
Budgeting is the process of preparing budgets whereas budgetary control is a device or technique of managerial control through budgets. According to J.Batty, “Budgetary control is a system which uses budgets as a means of planning and controlling all aspects of producing and/or selling commodities or services”. In effective budgetary control technique the business concern are effectively organised and the responsibilities of each departmental managers are clearly defined and the line of authority sharply drawn. The subordinates send reports on performance without any delay. The top management keeps a clear idea of the objectives of budgetary control and should implement the budgetary control programme seriously in order to infuse a sense of seriousness among the subordinates. The employees who are entrusted with the responsibilities of implementation of budgetary control should also be given appropriate authority to do so. If the circumstances warrant, the management should not hesitate to alter the budget figures. But at the same time, care must be taken to see that the budget figures are not altered too much or too often.
1) According to the passage, if the company wants to acquire another company, which type of budget will it consider?
a) cash flow budget
b) operating budget
c) static budget
d) surplus budget
e) financial budget
2) According to the passage, which of the followings will not be counted as the element of the effective budgetary control technique?
b) support of top management
c) quick reporting
d) reward and punishment to employees
e) effective organisation
3) According to the passage, what is the most significant aspect which should be considered while drafting the budget?
a) estimating revenue
b) determining expenses
c) SWOT analysis
d) assessment of the available resources
e) consulting all departments
4) According to the passage, which type of data should be used for formulating the budget?
a) qualitative data
b) current data
c) hypothetical data
d) historical data
e) data from future estimates
5) Which of the following statements is true in the context of the passage?
a) Master budget is a fixed budget that remains unaltered regardless of changes in factors.
b) SWOT analysis is a process that identifies an organization’s strengths and opportunities only.
c) Expected sales can be very challenging to accurately project.
d) None of the above
e) All are true
6) Find the incorrect statement on the basis of the given passage.
a) Businesses use a variety of budgets to measure their spending and develop effective strategies.
b) If the circumstances warrant, the management should not hesitate to alter the budget figures.
c) The financial budget ensures that right types of funds are available at the end of the financial year.
d) The budgeting process should not be completed in an office by a member of the accounting or finance team.
e) All are correct
7) Choose the word which as same meaning as the word rudimentary
8) Choose the word which as same meaning as the word project
9) Choose the word which as opposite meaning as the word imperative
10) Choose the word which as opposite meaning as the word unaltered
1). Correct Answer is: e)
It is clearly mentioned in the passage that if the business has the desire to take over any company, its financial budget shall determine the value up to which the business can quote for acquiring another organization.
2). Correct Answer is: d)
‘Reward and punishment to employees’ will not be counted as the element of the effective budgetary control technique as it is not given in the passage.
3). Correct Answer is: c)
It is mentioned in the passage that SWOT analysis is most important part which should be considered while drafting the budget because it tells about the strengths, weaknesses, opportunities and threats of the organization.
4). Correct Answer is: d)
It is clearly mentioned in the passage, that historical data should be used for preparing the budget for making it more accurate.
5). Correct Answer is: c)
According to the passage, true statement is “expected sales can be very challenging to accurately project.”
6). Correct Answer is: c)
It is given in the passage that financial budget ensures that right types of funds are available whenever they are required as it aims to manage the fund outflows with the fund inflows.
7). Correct Answer is: b)
The meaning of “rudimentary” is “basic / simple / elementary”.
8). Correct Answer is: e)
The meaning of “project” is “forecast / envisage”.
9). Correct Answer is: b)
The meaning of “imperative” is “requisite / necessary” and its opposite is “optional / discretionary”.
10). Correct Answer is: c)
The meaning of “unaltered” is “unaffected” and its opposite is “affected / pretentious”.
Daily Practice Test Schedule | Good Luck
|Topic||Daily Publishing Time|
|Daily News Papers & Editorials||8.00 AM|
|Current Affairs Quiz||9.00 AM|
|Quantitative Aptitude “20-20”||11.00 AM|
|Vocabulary (Based on The Hindu)||12.00 PM|
|General Awareness “20-20”||1.00 PM|
|English Language “20-20”||2.00 PM|
|Reasoning Puzzles & Seating||4.00 PM|
|Daily Current Affairs Updates||5.00 PM|
|Data Interpretation / Application Sums (Topic Wise)||6.00 PM|
|Reasoning Ability “20-20”||7.00 PM|
|English Language (New Pattern Questions)||8.00 PM|