Question

When actual revenues are less than budgeted revenues

A. an unfavorable spending variance would be reported.
B. a favorable spending variance would be reported.
C. an unfavorable revenue variance would be reported.
D. a favorable revenue variance would be reported.

Answer 1

An unfavorable revenue variance is reported when actual revenues fall short of budgeted revenues, indicating that the entity has earned less than expected.

Step-by-step explanation:

When actual revenues are less than budgeted revenues, it would result in an unfavorable revenue variance. This is because the term 'variance' in budgeting refers to the difference between what was expected and what was actually achieved. A negative difference or shortfall in revenue, where actual revenues are below what was budgeted or anticipated, indicates that less money has been brought into the entity than planned, which is considered unfavorable for the organization.