Multiple Choice Questions on Library Finance and Budgeting

1. Which of the following is NOT one of the three major characteristics of library expenditure? a) Library is a growing organism b) Library is a revenue-generating institution c) Library expenditure is recurring d) Library is a spending institution
2. The principle that states library expenditure should be planned ahead and proper estimates made for different items is called: a) Principle of maximum aggregate benefit b) Principle of advance planning c) Principle of equitable allocation d) Principle of economy
3. In special libraries, what percentage of the publication grant is normally allowed for periodicals? a) 50% b) 60% c) 70% d) 80%
4. The term "budget" is derived from which language? a) Latin b) Greek c) Old French d) German
5. Which type of budget involves allocation of a total sum by top management without specific ties to organizational goals? a) Formula budget b) Line-item budget c) Program budget d) Lump sum budget
6. What is the primary weakness of the formula budget method? a) It's too complex to implement b) It's calculated at a late point in time affecting advance planning c) It requires too much documentation d) It's too expensive to maintain
7. Which budgeting method starts from "fresh paper" and requires justification of the entire budget request in detail? a) Line-item budget b) Program budget c) Zero-based budget d) Formula budget
8. According to Warner's rules of thumb, what percentage of revenues do library expenditures typically represent in special libraries? a) 1-2% b) 0.5-5% c) 5-10% d) 10-15%
9. In special libraries, salaries typically account for what percentage of the budget? a) 30-50% b) 40-60% c) 50-80% d) 80-90%
10. Which budgeting system was first recommended by the Hoover Commission in the late 1940s? a) Zero-based budgeting b) Program budgeting c) Line-item budgeting d) Formula budgeting
11. PPBS stands for: a) Program Planning Budget System b) Planning Programming Budget System c) Planning Performance Budget System d) Program Performance Budget System
12. Which of these is a major advantage of program budgeting? a) It's simple to prepare b) It requires minimal staff involvement c) It facilitates comparative analyses among library sub-programs d) It focuses on past performance only

Answer Key

1. b) Library is a revenue-generating institution
2. b) Principle of advance planning
3. c) 70%
4. c) Old French
5. d) Lump sum budget
6. b) It's calculated at a late point in time affecting advance planning
7. c) Zero-based budget
8. b) 0.5-5%
9. c) 50-80%
10. b) Program budgeting
11. b) Planning Programming Budget System
12. c) It facilitates comparative analyses among library sub-programs

Explanations

1. Libraries are spending institutions, not revenue-generating ones
2. The text explicitly states this principle for advance financial planning
3. The text mentions that normally 70% of publication grant goes to periodicals
4. The text mentions budget is derived from old French word "bougette"
5. Lump sum budget is defined as allocation of total sum without specific ties to goals
6. The text specifically mentions this as a primary weakness of formula budgets
7. Zero-based budgeting is described as starting on "fresh paper" with complete justification
8. The text cites Warner's rule of thumb stating 0.5-5% of revenues
9. According to Warner's rules, salaries account for 50-80% of special library budgets
10. The text explicitly mentions this historical fact
11. The full form is given in the text
12. The text specifically mentions this as a major advantage of program budgeting