What does it mean to have a negative budget variance?

What does it mean to have a negative budget variance?

• A. Spending less than budgeted
• B. Spending more than budgeted
• C. Having more income than expected
• D. Achieving savings goals

Answer: (B)

A negative budget variance indicates that expenditures are exceeding what was planned in the budget. In other words, when actual spending is higher than the budgeted amounts, it reflects a shortfall that could impact financial stability and goals. This situation signifies that an individual or organization is not adhering to their financial plan, potentially leading to challenges in managing their resources effectively. Choices that describe spending less than budgeted, having more income than expected, or achieving savings goals all signify positive financial outcomes. They indicate that either efficiency is being achieved in spending or that there is an increase in funds, which contrasts with the definition of a negative budget variance, which is inherently about overspending.

A negative budget variance indicates that expenditures are exceeding what was planned in the budget. In other words, when actual spending is higher than the budgeted amounts, it reflects a shortfall that could impact financial stability and goals. This situation signifies that an individual or organization is not adhering to their financial plan, potentially leading to challenges in managing their resources effectively.

Choices that describe spending less than budgeted, having more income than expected, or achieving savings goals all signify positive financial outcomes. They indicate that either efficiency is being achieved in spending or that there is an increase in funds, which contrasts with the definition of a negative budget variance, which is inherently about overspending.