Question

According to the course materials, budgeting should be: a. Rigid with significant personal penalties if you miss your goal b. Absolutely accurate with no possibility for mistakes c. Flexible d. Completed once-a-year

Answer 1

Answer:

C) Flexible

Explanation:

The whole concept behind budgeting is that future costs are estimated. As always when you estimate some future event, there is a fair chance that your estimate will be mistaken.

No matter how well thought, calculated and recalculated your budget is, it usually only serve as a parameter. The fact that budgeting is not exact is not always bad, since your business sales can be higher than expected, so your whole production and costs budgets will be wrong, but for a good reason.

That is why budgets must always be flexible and easily adaptable to changes, either good or bad changes.