ECONOMICS
BUDGETING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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creating a budget which consists of tracking spending
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creating a budget which consists of listing monthly expenses
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creating a budget which consists of listing monthly income
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creating a budget which consists of having to make investments
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Detailed explanation-1: -Explanation for correct answer: Preventing net operating loss is not a part of budgeting as the budget is prepared towards finding realizable goals.
Detailed explanation-2: -Answer and Explanation: Statement A is incorrect-budgets should not be prepared solely by top management.
Detailed explanation-3: -Cash inflows and cash outflows are used to calculate the budget. Operating expenses are a part of the total cash outflow. Setup cost is incurred for starting the business and hence is excluded in the budget calculations.
Detailed explanation-4: -The answer is b. Sales budgets and direct labor budgets are operating budgets, not financial budgets. The marginal expenditure budget is not one of the master budgets.