CUET UG Business Studies Booster Test 2 Types of Plans -

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CUET UG Business Studies Test 2 Types of Plans

⏱️ 30 Minutes

❓ 20 Questions

📌 Answers are locked once submitted — results and explanations appear at the end.

CUET UG Business Studies Test 2 Types of Plans

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QUESTION 1 OF 20

A company organises a one-day seminar for its investors. The management creates a specific plan just for this event. Why is this considered a single-use plan?

Answer Review

1 A company organises a one-day seminar for its investors. The management creates a specific plan just for this event. Why is this considered a single-use plan?

A Because it provides a broad framework for all future seminars.

B Because it involves strict rules with no flexibility across the company.

C Because it sets the long-term strategic direction of the company.

D Because the event is non-recurring and the plan is tailored for a one-time use.

💡 Short Explanation

Single-use plans address unique, non-repeating events. They become obsolete once the event concludes. They focus on specific departmental or project-based needs.

✅ Correct Answer Explanation

A single-use plan is specifically developed for a project or event that is not likely to be repeated in the future. In this scenario, the one-day seminar is a distinct, non-recurring situation. The plan includes the specific budget, schedule, and tasks for that particular day. Once the seminar is over, the plan has served its purpose and is no longer active, which is the defining characteristic of single-use planning in NCERT.

❓ Why Other Options Are Incorrect

Option A → Providing a broad framework for future activities is the hallmark of a Standing Plan, not a single-use plan.
Option B → While it may include rules, a single-use plan is defined by its duration and uniqueness, not by its company-wide flexibility.
Option C → Setting long-term direction is the role of a Strategy, which is a comprehensive, broad plan.

🎯 Strategy

Used: Contextual/Tonal Matching

Application: The term "one-day seminar" implies a "one-time" application, matching the definition of "single-use."

Final Logic: Specific event + One-time use = Single-use plan.

🧠 Memory Trick

Single = Special/Solo Event.

📚 Class XII – Business Studies – Chapter: Planning – Topic: Single-use and Standing Plans

2 Statement I: Single-use plans like specific projects are designed to handle non-recurring situations.
Statement II: Projects are exactly the same as standing plans but differ in scope and complexity.

A Both Statement I and II are correct

B Statement I is correct, Statement II is incorrect

C Statement I is incorrect, Statement II is correct

D Both Statement I and II are incorrect

💡 Short Explanation

Single-use plans target non-recurring situations. Projects and standing plans are fundamentally different in nature. Standing plans are for recurring activities; projects are temporary.

✅ Correct Answer Explanation

Statement I is a verbatim definition from NCERT: single-use plans (like projects or programmes) handle non-recurring situations. Statement II is incorrect because projects are not the same as standing plans. Standing plans (like policies or rules) are meant to be used repeatedly over a long period, whereas projects have a defined beginning and end.

❓ Why Other Options Are Incorrect

Option A → Incorrect because Statement II inaccurately equates temporary projects with permanent standing plans.
Option C → Incorrect because Statement I is the correct fundamental definition of a single-use plan.
Option D → Incorrect because Statement I is factually true.

🎯 Strategy

Used: Elimination

Application: Identifying that projects (temporary) and standing plans (permanent) are opposites helps eliminate any option validating Statement II.

Final Logic: Single-use is for the unique (True); Projects are not permanent guides (False).

🧠 Memory Trick

Standing = Repeat; Project = Finish.

📚 Class XII – Business Studies – Chapter: Planning – Topic: Single-use and Standing Plans

3 Which of the following is NOT true about standing plans created for repeated use?

A They are designed to ensure internal operations run smoothly.

B They are developed once but modified from time to time.

C They span a specific one-week period and are then discarded.

D They greatly enhance efficiency in routine decision-making.

💡 Short Explanation

Standing plans provide a permanent organizational framework. They deal with recurring, routine activities. They are durable and exist as long as the organization needs them.

✅ Correct Answer Explanation

The question asks for the NOT true statement. Option C describes the nature of a single-use plan (short duration and discarded after use). Standing plans (like policies, procedures, and rules) are developed once and stay in effect for a long time to ensure that internal operations run smoothly (A) and to enhance efficiency in routine decision-making (D). While stable, they are modified (B) as business needs evolve.

❓ Why Other Options Are Incorrect

Option A → This is a core purpose of standing plans to prevent constant "reinventing the wheel."
Option B → This is true; standing plans are long-term but must adapt to stay relevant.
Option D → This is true; standing plans automate regular decisions.

🎯 Strategy

Used: Odd One Out

Application: Options A, B, and D imply longevity and routine. Option C implies transience, making it the exception.

Final Logic: Standing plans are for the "Long-run," not for a "one-week period."

🧠 Memory Trick

Standing = Stays.

📚 Class XII – Business Studies – Chapter: Planning – Topic: Single-use and Standing Plans

4 When establishing plans for routine activities, a logical sequence or hierarchy is often observed. Arrange them from the broadest conceptual plan to the most rigid and specific:
1. Rules
2. Policies
3. Methods
4. Procedures

A 1, 3, 4, 2

B 2, 4, 3, 1

C 2, 3, 4, 1

D 4, 2, 1, 3

💡 Short Explanation

Policies provide the broad "Think-line." Procedures provide the chronological "Path." Rules are the most specific "Do/Don't" commands.

✅ Correct Answer Explanation

The hierarchy moves from general guidelines to specific instructions. Policies (2) are the broadest as they only channelize thinking. Procedures (4) are more specific as they detail chronological steps. Methods (3) are even more specific as they define the technique for a single step. Rules (1) are the most rigid and specific as they allow no discretion at all.

❓ Why Other Options Are Incorrect

Option A → Starts with Rules, which are the most specific, not the broadest.
Option C → Places Methods (specific technique) before Procedures (general steps), which is logically backward.
Option D → Starts with Procedures; however, Policies are conceptually broader as they guide the creation of procedures.

🎯 Strategy

Used: Dimensional/Unit Analysis

Application: Evaluate plans based on "Discretion." Policies (High discretion) →Rules (Zero discretion).

Final Logic: General Guide →Steps →Technique →Rigid Instruction.

🧠 Memory Trick

P-P-M-R (Policy, Procedure, Method, Rule).

📚 Class XII – Business Studies – Chapter: Planning – Topic: Types of Plans

5 Assertion (A): Objectives need to be expressed in specific, measurable terms to define desired results.
Reason (R): Expressing desired results quantitatively makes it impossible to achieve them within a given time period.

A Both A and R are true and R is the correct explanation of A

B Both A and R are true but R is not the correct explanation of A

C A is false but R is true

D A is true but R is false

💡 Short Explanation

Objectives must be clear (SMART). Quantification helps in measuring performance. Deadlines are essential for accountability, not an impossibility.

✅ Correct Answer Explanation

Assertion (A) is true; for planning to be effective, objectives must be specific and measurable (e.g., "increase sales by 10%"). This provides a clear target. Reason (R) is false because quantification actually makes it easier to track progress and achieve goals within a time period. Without numbers, management cannot compare actual results with expected results.

❓ Why Other Options Are Incorrect

Option A → Incorrect because R is a conceptually false statement in management.
Option B → Fails because R is false.
Option C → Fails because A is a primary requirement for setting objectives.

🎯 Strategy

Used: Contextual/Tonal Matching

Application: Measurement (A) is a positive tool for control; the claim that it makes things "impossible" (R) is a negative, illogical contradiction.

Final Logic: Specificity aids achievement; it doesn't hinder it.

🧠 Memory Trick

Numbers = Clarity.

📚 Class XII – Business Studies – Chapter: Planning – Topic: Objectives

6 Match the specific features of objectives (end goals) with their descriptions:

List 1	List 2
1. Focus	A. Top management
2. Setup by	B. Ends which management seeks to achieve
3. Definition	C. Broad, general issues guiding business
4. Expression	D. Specific terms, often quantitative

A 1-C, 2-A, 3-B, 4-D

B 1-A, 2-C, 3-D, 4-B

C 1-B, 2-D, 3-A, 4-C

D 1-D, 2-B, 3-C, 4-A

💡 Short Explanation

Objectives define the "Mission." They are mandated by the highest authority. They must be quantifiable for tracking.

✅ Correct Answer Explanation

1-C: The Focus of objectives is on the broad, general issues that guide the entire business. 2-A: Objectives are primarily setup by Top Management as they define the organization's mission. 3-B: The Definition of objectives is the "ends which management seeks to achieve." 4-D: The Expression of objectives should be in specific, often quantitative terms to allow for performance measurement.

❓ Why Other Options Are Incorrect

Option B → Incorrectly matches Focus (1) with Top Management (A); setup by is the better match for Top Management.
Option C → Matches Definition (3) with Top Management (A), which is incorrect.
Option D → Incorrectly matches Focus (1) with Quantitative Expression (D).

🎯 Strategy

Used: Option Grouping

Application: Identify the strongest pair: 3-B (Definition = Ends). Only Option A contains this link.

Final Logic: Aligning the "What, Who, and How" of objective setting.

🧠 Memory Trick

Objective = End goal.

📚 Class XII – Business Studies – Chapter: Planning – Topic: Objectives

📄 Passage

"A strategy provides the broad contours of an organisation's business. It will also refer to future decisions defining the organisations direction and scope in the long run. Thus, we can say a strategy is a comprehensive plan for accomplishing an organisation objectives. This comprehensive plan will include three dimensions... Whenever a strategy is formulated, the business environment needs to be taken into consideration."

According to the passage, how does strategy shape the organisation's long-term direction?

A By detailing routine day-to-day chronological tasks

B By defining the organisation's scope and future decisions

C By providing strict, inflexible rules for employees

D By limiting the monetary resources available to departments

✅ Correct Answer Explanation

The passage explicitly states that strategy refers to "future decisions defining the organisation's direction and scope in the long run." Strategy is not concerned with day-to-day tasks (which are procedures) or simple rules. It is a comprehensive framework that helps an organization decide what business it should be in and how it will compete.

❓ Why Other Options Are Incorrect

Option A → This describes Procedures and Methods.
Option C → This describes Rules.
Option D → While strategy involves resource allocation, its purpose is to provide necessary resources to achieve goals, not primarily to "limit" them.

🎯 Strategy

= Scope.

📚 Class XII – Business Studies – Chapter: Planning – Topic: Strategy

📄 Passage

Based on the passage, the comprehensive plan known as a strategy includes three dimensions. Which of the following represents the resource allocation dimension?

A Ignoring the dynamic business environment

B Setting short-term informal rules

C Establishing the daily recruitment policy

D Allocating necessary funds and physical assets to achieve the objective

💡 Short Explanation

Plans require physical and financial backing. Resource allocation is the "Execution" dimension of strategy.

✅ Correct Answer Explanation

The three dimensions of strategy are: 1. Determining long-term objectives, 2. Adopting a particular course of action, and 3. Allocating resources. Option D correctly identifies the third dimension, which involves committing the organization's funds and physical assets to ensure the strategy can be successfully implemented.

❓ Why Other Options Are Incorrect

Option A → Strategy must consider the dynamic environment, never ignore it.
Option B → Strategy is formal and long-term, not short-term and informal.
Option C → Recruitment is a functional Policy, which is narrower than the overarching corporate strategy.

🎯 Strategy

needs Fuel (Resources).

📚 Class XII – Business Studies – Chapter: Planning – Topic: Strategy

9 A company has a principle that it will only purchase raw materials from eco-friendly suppliers. This acts as a guide to managerial action in selecting vendors. What type of plan is this guiding principle?

A Procedure

B Policy

C Rule

D Programme

💡 Short Explanation

Policies are general guidelines for decision-making. They define boundaries rather than specific steps. They channelize thinking toward organizational values.

✅ Correct Answer Explanation

A Policy is a general statement that guides thinking or channelizes energies toward a particular direction. The decision to buy only from eco-friendly suppliers is a guiding principle (a Purchase Policy). It doesn't tell the manager exactly how to buy (Procedure) or give a specific number (Budget), but it provides the "decision framework" for selecting vendors.

❓ Why Other Options Are Incorrect

Option A → A procedure would list the step-by-step sequence of vendor registration.
Option C → A rule would be a specific command like "No non-eco-friendly vendors," but a "guiding principle" fits the technical definition of a policy.
Option D → A programme is a comprehensive project plan, not a single ongoing principle.

🎯 Strategy

Used: Contextual/Tonal Matching

Application: The key phrase "guide to managerial action" is the standard definition of a Policy.

Final Logic: A standing guide for routine decisions is a policy.

🧠 Memory Trick

Policy = Guideline.

📚 Class XII – Business Studies – Chapter: Planning – Topic: Policy

10 Why are minor policies considered an essential part of an organisation's decision framework?

A They strictly forbid managers from using any discretion.

B They replace the need for overall organisational objectives.

C They provide minute details of information vital to the employees for internal day-to-day decisions.

D They are strictly formulated to inform customers and competitors about long-term goals.

💡 Short Explanation

Policies exist at all levels of management. Minor policies handle specific operational areas. They provide the consistency needed for daily functions.

✅ Correct Answer Explanation

While major policies define the broad framework, minor policies are formulated to help with internal day-to-day decisions. They provide the necessary details for employees to handle routine tasks (like handling a customer return or employee leave) consistently without needing top-management intervention for every minor situation.

❓ Why Other Options Are Incorrect

Option A → Policies allow for discretion; Rules are what forbid it.
Option B → Policies support objectives; they can never replace them.
Option D → Policies are primarily internal guides, while long-term goals are shared via the corporate strategy or mission statement.

🎯 Strategy

Used: Elimination

Application: Discard A (that's a rule) and B (that's impossible). D is external. C describes the "Operational/Internal" nature of minor policies.

Final Logic: Minor policies make small decisions easy and uniform.

🧠 Memory Trick

Minor Policy = Daily Detail.

📚 MCQ Analysis: Questions 11–20

11 Which of the following is NOT correct regarding the step sequence in a procedure?

A They detail the exact manner in which work is performed.

B They allow complete flexibility in how the steps are arranged.

C They are specified in a chronological order.

D They are generally meant for insiders to follow.

💡 Short Explanation

Procedures are sequential. Changing the order can break the process. Consistency is the primary goal.

✅ Correct Answer Explanation

The question asks for the NOT correct statement. Option B is incorrect because procedures do not allow flexibility in arrangement. By definition, procedures are steps specified in a chronological order (C). If everyone followed their own sequence, the "exact manner" (A) would be lost, leading to chaos in internal operations.

❓ Why Other Options Are Incorrect

Option A → This is the purpose of a procedure: to standardize how work is done.
Option C → Chronology is the defining feature of a procedure.
Option D → Procedures are internal "SOPs" for employees (insiders).

🎯 Strategy

Used: Extreme Word Filter

Application: The word "complete flexibility" contradicts the definition of a "step sequence" or "chronological order."

Final Logic: A sequence by definition is a fixed, non-flexible order.

🧠 Memory Trick

Procedure = Path (1, 2, 3).

📚 Class XII – Business Studies – Chapter: Planning – Topic: Procedure

12 Statement I: Procedures are routine steps to be carried out within a broad policy framework.
Statement II: Policies and procedures are entirely independent and not interlinked with each other.

A Statement I is true, Statement II is true

B Statement I is false, Statement II is false

C Statement I is false, Statement II is true

D Statement I is true, Statement II is false

💡 Short Explanation

Plans are integrated. Policies set the "Why," Procedures set the "How." The procedure must respect the boundaries of the policy.

✅ Correct Answer Explanation

Statement I is correct; procedures are the operational steps designed to implement a policy. Statement II is incorrect because they are highly interlinked. For example, if a company has a policy of "Fair Recruitment," the procedure for interviewing candidates must follow steps that reflect that fairness. A procedure cannot exist in a vacuum; it must be housed within a policy.

❓ Why Other Options Are Incorrect

Option A → Incorrect because Statement II claims they are independent.
Option B → Incorrect because Statement I is a fundamental management concept.
Option C → Inverts the validity of both statements.

🎯 Strategy

Used: Contextual/Tonal Matching

Application: All types of plans are "Derivatives" of each other, meaning they cannot be "entirely independent."

Final Logic: Policy provides the frame, Procedure fills the frame.

🧠 Memory Trick

Policy →Procedure.

📚 Class XII – Business Studies – Chapter: Planning – Topic: Policy and Procedure

13 An HR manager decides to use 'on-the-job training' for supervisory staff and 'seminars' for top management. This choice of task performance falls under which specific type of plan?

A Rule

B Objective

C Method

D Budget

💡 Short Explanation

Methods define the technical "how" for one step. They provide the best way to do a task. They vary based on the level of the employee and complexity of the task.

✅ Correct Answer Explanation

A Method is the prescribed way in which a task has to be performed. Choosing between "on-the-job training" and "seminars" is a selection of the best work technique for the specific training task. Selecting the right method ensures that the task is done efficiently and effectively for the target audience.

❓ Why Other Options Are Incorrect

Option A → A rule would be "Training is mandatory."
Option B → An objective would be "Improve staff skills by 20%."
Option D → A budget would be "Spend $5,000 on training."

🎯 Strategy

Used: Substitution

Application: Substitute "Choice of task performance" or "Work technique." This points directly to "Method."

Final Logic: The technique used to complete a job is its method.

🧠 Memory Trick

Method = Manner of working.

📚 Class XII – Business Studies – Chapter: Planning – Topic: Method

14 Assertion (A): The method or work technique may vary from task to task within an organisation.
Reason (R): Selecting the proper method saves time, effort, and money, thereby increasing operational efficiency.

A Both A and R are true and R is the correct explanation of A

B Both A and R are true but R is not the correct explanation of A

C A is true but R is false

D A is false but R is true

💡 Short Explanation

Different tasks require different approaches. Methods are optimized for specific outcomes. Efficiency is the primary reason for studying methods.

✅ Correct Answer Explanation

Assertion (A) is true; different tasks (e.g., manufacturing vs. accounting) require different methods. Reason (R) correctly explains why managers put effort into selecting these methods: because the right technique maximizes output while minimizing time, effort, and money. This link between specific techniques and general efficiency is a core tenet of Taylor's Scientific Management, often cited in NCERT.

❓ Why Other Options Are Incorrect

Option B → Fails because R is indeed the direct motivation for the variation in A.
Option C → Fails because R is a factually true benefit of method selection.
Option D → Fails because A is true; managers do not use one single method for all diverse tasks.

🎯 Strategy

Used: Contextual/Tonal Matching

Application: Using the "Because" test: (A) is true because (R) is the goal.

Final Logic: Task variation exists to optimize efficiency.

🧠 Memory Trick

Best way = Best Results.

📚 Class XII – Business Studies – Chapter: Planning – Topic: Method

15 "No smoking in the factory premises" is a strict instruction. Why is it classified as a rule rather than a policy?

A It provides broad parameters for discretionary decision-making.

B It reflects a managerial decision that a certain action must not be taken, allowing for no compromise.

C It is a comprehensive plan for long-term strategic growth.

D It is a chronological sequence of routine steps.

💡 Short Explanation

Rules are "Must" or "Must Not" statements. They allow zero discretion. They are simple and absolute.

✅ Correct Answer Explanation

A Rule is a specific statement that informs employees what is to be done or not done. Unlike a policy, which guides thinking and allows for discretion, a rule is an absolute command. "No Smoking" is a perfect example because it allows for no compromise or interpretation by the manager; it must be followed as stated.

❓ Why Other Options Are Incorrect

Option A → This describes a Policy.
Option C → This describes a Strategy.
Option D → This describes a Procedure.

🎯 Strategy

Used: Contextual/Tonal Matching

Application: The words "strict instruction" and "no smoking" match the technical definition of a "Rule" as a "must/must not" directive.

Final Logic: Rules are binary (Yes/No), while policies are spectrums (Guidelines).

🧠 Memory Trick

Rules = No Room for argument.

📚 Class XII – Business Studies – Chapter: Planning – Topic: Rule

16 Which statement is incorrect regarding the "no flexibility" nature of a rule?

A Rules are the simplest type of plans.

B There is no compromise in following a rule unless a policy decision changes it.

C They inform exactly what must or must not be done.

D Rules allow managers to use their discretion based on a given situation.

💡 Short Explanation

Rules are the opposite of discretionary. They apply equally to everyone in all situations. If discretion is allowed, it ceases to be a rule.

✅ Correct Answer Explanation

The question asks for the incorrect statement. Option D is incorrect because rules do not allow for discretion. This is what distinguishes them from policies. A manager cannot decide to allow someone to smoke "just this once" if there is a "No Smoking" rule. Rules are rigid and specific.

❓ Why Other Options Are Incorrect

Option A → Correct; they are the simplest because they require no multi-step sequence or complex analysis.
Option B → Correct; rules are binding until the underlying policy is formally changed.
Option C → Correct; this is the fundamental definition of a rule.

🎯 Strategy

Used: Extreme Word Filter

Application: In management terminology, "Rule" and "Discretion" are mutually exclusive concepts.

Final Logic: A rule is a "Static Command," not a "Situational Choice."

🧠 Memory Trick

Rules = Rigid; Policy = Plastic (Flexible).

📚 Class XII – Business Studies – Chapter: Planning – Topic: Rule

17 Match the elements included in a detailed programme with their corresponding descriptions:

List 1	List 2
1. Objectives	A. Expected results in numerical terms
2. Policies	B. Desired end position of the project
3. Procedures	C. General guiding statements for the project
4. Budget	D. Chronological steps to execute tasks

A 1-A, 2-B, 3-C, 4-D

B 1-B, 2-C, 3-D, 4-A

C 1-C, 2-D, 3-A, 4-B

D 1-D, 2-A, 3-B, 4-C

💡 Short Explanation

A programme is a "Plan of Plans." It incorporates all other planning types. It is used for specific, complex projects.

✅ Correct Answer Explanation

1-B: Objectives in a programme define the desired end position of that specific project. 2-C: Policies act as the general guiding statements for project decisions. 3-D: Procedures detail the chronological steps needed to execute the project's tasks. 4-A: The Budget expresses the expected results in numerical terms (financial and physical).

❓ Why Other Options Are Incorrect

Option A → Incorrectly matches Objectives (1) with numerical results (A).
Option C → Incorrectly matches Objectives (1) with guiding statements (C).
Option D → Incorrectly matches Objectives (1) with chronological steps (D).

🎯 Strategy

Used: Option Grouping

Application: Match the most certain pair: 4-A (Budget = Numerical). Options A and B both have this. Now match 3-D (Procedures = Chronological). Only Option B satisfies both.

Final Logic: Aligning components with their core functional definitions.

🧠 Memory Trick

Programme = A mini-company plan.

📚 Class XII – Business Studies – Chapter: Planning – Topic: Programme

18 A programme outlines the entire gamut of activities (activity structure) required for a project. How does it relate to an organisation's policies?

A It contradicts the organisation's policy to ensure independence.

B It outlines how tasks and resources will contribute to the overall business plan within the broad policy framework.

C It strictly avoids including rules or procedures to maintain structural simplicity.

D It operates outside any policy framework to ensure maximum flexibility.

💡 Short Explanation

Programmes are "Nested" within policies. They serve the organization's broader mission. Consistency across projects is maintained via the policy framework.

✅ Correct Answer Explanation

A Programme is a detailed, single-use plan, but it must be consistent with the organization's identity. Therefore, all its detailed activities and resource allocations are worked out within the broad policy framework. This ensures that even unique projects contribute to the overall business plan rather than moving in a random or contradictory direction.

❓ Why Other Options Are Incorrect

Option A → Contradicting policy would lead to organizational misalignment and brand damage.
Option C → A programme must include rules and procedures to be "comprehensive."
Option D → No plan in a formal organization operates "outside" its policy framework.

🎯 Strategy

Used: Contextual/Tonal Matching

Application: "Within the broad policy framework" is the standard phrase in NCERT used to describe how specific plans relate to general ones.

Final Logic: Specificity (Programme) requires the boundary of Philosophy (Policy).

🧠 Memory Trick

Policy = The Boundary; Programme = The Game.

📚 Class XII – Business Studies – Chapter: Planning – Topic: Programme

19 A manager prepares a statement showing estimated cash inflows and outflows over the next six months to ensure the business doesn't hold excess idle cash. This financial plan is best identified as:

A A cash strategy

B A cash policy

C A cash procedure

D A cash budget

💡 Short Explanation

Budgets are financial and numerical. They deal with future estimates. A "Cash Budget" is a specific tool for liquidity management.

✅ Correct Answer Explanation

A Budget is a statement of expected results expressed in numerical terms. In this case, the numerical estimates are the expected cash inflows and outflows. Since it deals with future financial figures over a specific period (six months), it fits the definition of a cash budget. Its purpose is both planning (ensuring enough cash) and controlling (preventing idle cash).

❓ Why Other Options Are Incorrect

Option A → A strategy would be "We will remain debt-free," not a table of inflows/outflows.
Option B → A policy would be "We pay all vendors within 30 days."
Option C → A procedure would be "The steps to deposit a cheque."

🎯 Strategy

Used: Contextual/Tonal Matching

Application: "Inflows and outflows" are numerical estimates of cash, which is the definition of a budget.

Final Logic: Numbers + Future estimates = Budget.

🧠 Memory Trick

Money in numbers = Budget.

📚 Class XII – Business Studies – Chapter: Planning – Topic: Budget

20 Statement I: A budget quantifies future facts and figures into numerical estimates.
Statement II: Because budgets are purely numerical, they cannot serve as a control device.

A Both statements are correct

B Both statements are incorrect

C Statement I is correct, Statement II is incorrect

D Statement I is incorrect, Statement II is correct

💡 Short Explanation

Budgets translate words into math. Measurement is the basis of control. Comparing actuals vs. budget is a primary management task.

✅ Correct Answer Explanation

Statement I is correct; a budget acts as a plan that quantifies future expectations. Statement II is incorrect because being numerical is exactly what makes it an excellent control device. By having a numerical benchmark, a manager can easily compare actual performance against the plan and identify deviations. This makes budgeting a dual-purpose tool for both planning and controlling.

❓ Why Other Options Are Incorrect

Option A → Incorrect because Statement II contradicts the basic management principle of "Variance Analysis."
Option B → Incorrect because Statement I is a verbatim definition of a budget.
Option D → Inverts the validity of both statements.

🎯 Strategy

Used: Contextual/Tonal Matching

Application: "Numerical" (S1) is the reason why "Control" (S2) is possible. The claim that it "cannot" serve as a control device is a logical fallacy.

Final Logic: Numbers provide the "Yardstick" for control.

🧠 Memory Trick

Budget = Plan + Control.

📚 Class XII – Business Studies – Chapter: Planning – Topic: Budget

CUET UG Business Studies Test 2 Types of Plans

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