ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -A budget variance is an accounting term that describes instances where actual costs are either higher or lower than the standard or projected costs. An unfavorable, or negative, budget variance is indicative of a budget shortfall, which may occur because revenues miss or costs come in higher than anticipated.

Detailed explanation-2: -An adverse variance is where actual income is less than budget, or actual expenditure is more than budget. This is the same as a deficit where expenditure exceeds the available income. A favourable variance is where actual income is more than budget, or actual expenditure is less than budget.

Detailed explanation-3: -What does favorable and unfavorable mean in accounting? In the field of accounting, variance simply refers to the difference between budgeted and actual figures. Higher revenues and lower expenses are referred to as favorable variances. Lower revenues and higher expenses are referred to as unfavorable variances.

Detailed explanation-4: -A balanced budget is when the government spends an amount equal to the amount it collects in taxes. A budget deficit is when the government spends more than it collects in taxes. A budget surplus is when the government collects more in taxes than it spends.

Detailed explanation-5: -A positive variance occurs where ‘actual’ exceeds ‘planned’ or ‘budgeted’ value. Examples might be actual sales are ahead of the budget.