Question

Budgeting competency requires the ability to:__________

Answer 1

Answer:

d. All of the above

Explanation:

A budget can be defined as a financial plan of estimated revenues, resources and expenses over a specific period of time in a particular country. It is usually reevaluated based on future plans and objectives periodically, typically on an annual basis. Thus, budgets are usually compiled, analyzed and re-evaluated on periodic basis.

Budgeting competency requires the ability to:

a. Define the production system.

b. Quantify expected operations in dollars.

c. Analyze actual results considering the budget to determine where costs were better or worse than expected.

Additionally, the first step of the budgeting process is to prepare a list of each type of income and expense that will be part of the budget.

The final step by the management of an organization in the financial decision making process is making necessary adjustments to the budget.

The benefits of having a budget is that it aids in setting goals, earmarking revenues and resources, measuring outcomes and planning against contingencies.