ECONOMICS
BUDGETING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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provides a standard that under certain circumstances, a manager may be motivated to strive to achieve.
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a tool for evaluating performance where the budgeted & the actual figure will be compared which the causes for any variance between the actual & budgeted output can be identified.
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the actions of the different parts of an organization can be brought together and reconciled into a common plan.
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involves developing objectives and preparing various activities to achieve the goals.
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Detailed explanation-1: -From the managements perspective budget makes planning how revenue can be increased or distributed efficiently at the same time where expenses can be reduced across all the business activities. Budget is generally made keeping in mind all the business activities not a specific one.
Detailed explanation-2: -A performance budget is one that reflects both the input of resources and the output of services for each unit of an organization. The goal is to identify and score relative performance based on goal attainment for specified outcomes.
Detailed explanation-3: -The budget is a management instrument used by any entity, financially ensuring the dimension of the objectives, revenues, expenses and results at the management centers level and finally evaluating the economic efficiency through comparing the results with those budgeted for.
Detailed explanation-4: -Budgeting, as a control tool, provides an action plan to ensure that the organization’s actual activities are least deviated from the planned activities. Budgets are used to give an overview of the organization and its operations.