ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -There are four common types of budgets that companies use: (1) incremental, (2) activity-based, (3) value proposition, and (4) zero-based. These four budgeting methods each have their own advantages and disadvantages, which will be discussed in more detail in this guide. Source: CFI’s Budgeting & Forecasting Course.

Detailed explanation-2: -A budget helps create financial stability. By tracking expenses and following a plan, a budget makes it easier to pay bills on time, build an emergency fund, and save for major expenses such as a car or home. Overall, a budget puts a person on stronger financial footing for both the day-to-day and the long term.

Detailed explanation-3: -The correct answer is d; the motivation of employees is not a crucial role of budgeting in an organization because leaders in an organization do not share the budget with their employees.

Detailed explanation-4: -Budgeting for the national government involves four (4) distinct processes or phases : budget preparation, budget authorization, budget execution and accountability. While distinctly separate, these processes overlap in the implementation during a budget year.