Question

Which of the following is true of budgets? a.Budgets eradicate the need to compare a company's actual results with budgeted results. b.Budgets are financial plans for the future. c.Budgets delegate the decision making power to the employees. d.Budgets ensure that the financial goals set by management are achieved. e.Budgets rule out the need to communicate and coordinate the plans of the organization to each employee.

Answer 1

Answer:

b.Budgets are financial plans for the future

Explanation:

A budget is a projection of future revenues and expenses of a company.  Budgets are prepared at the beginning of a financial period and represent the desired level of activity for the business. A budget can be made for use by an individual, a small business, corporate,  or the government.

Since budgets are forecasts of revenue and expenses, they are financial plans for a specified period. They help maintain focus on the core activities of the business. A budget helps in achieving company goals by allocating adequate resources to critical areas of operation. Personal or individual budgets are essential in attaining personal short and long-term objectives.