Which item indicates how actual results compare to the budget?

• A. Beginning Balance
• B. Budget Variance
• C. Ending Balance
• D. Notes on Significant Transactions

Answer: (B)

Budget Variance is the item that shows how actual results compare to the budget. It measures the difference between what was planned and what actually happened, usually calculated as Actual minus Budget for each line item or for the overall total. This lets you see where performance diverged from the plan and by how much, so you can assess whether things are on track and where adjustments might be needed. Positive or negative variances help indicate whether actual results exceeded the budget or fell short, and whether that difference is favorable or unfavorable depending on whether you’re looking at revenues or expenses. The other items don’t directly show this comparison: Beginning Balance and Ending Balance reflect cash positions rather than performance against the budget, and Notes on Significant Transactions provide context but not a measure of budget adherence.