The difference between budgeted amounts and an entity's actual results is called a:
A) control tool.
B) budget error.
C) variance.
D) excess.

Question

Quizplus · Accepted Answer

The difference between budgeted amounts and an entity's actual results is called a variance. This is a common term used in financial analysis to measure the deviation between actual performance and the budgeted or planned amount. It helps management to identify areas of the business where the performance is not meeting expectations, or where there is scope for improvement or cost reductions. Option A is incorrect as control tool is a broader term consisting of checks and balances put in place by management to ensure compliance with rules and regulations. Option B is incorrect as budget error would indicate a mistake made during the budgeting process. Option D is incorrect as excess refers to amounts above a certain level, and is not a term used to describe variances.

The Difference Between Budgeted Amounts and an Entity's Actual Results