What is a budget variance?

• A. The difference between projected (budgeted) and actual results, showing over- or under-spending.
• B. The projection of future revenues.
• C. The record of cash receipts.
• D. A planned adjustment to the budget.

Answer: (A)

A budget variance is the difference between what you planned in the budget and what actually happened with revenues and expenses. It shows whether spending went over or under the plan, or whether revenues were higher or lower than projected. This helps you see how well the organization performed against its budget and where adjustments might be needed. Typically, you calculate it as actual results minus budgeted amounts, and interpret it to understand whether the variance is favorable or unfavorable depending on whether it improves or worsens financial results. The other descriptions point to forecasting future revenues, recording cash receipts, or planning changes to the budget, none of which describe the gap between budgeted figures and actual outcomes.