### Understanding Effective Budgets**Question 3: For budgets to be effective:**- **A. Objectives should be attainable.**- **B. There should be management approval.**- **C. They should be developed from the "bottom-up".**- **D. Both A and B.**- **E. A, B, and C.****Explanation:**To create an effective budget, several key criteria must be met. Not only should the objectives outlined in the budget be realistic and achievable (A), but it is also crucial for the budget to receive management approval to ensure alignment with organizational goals (B). Additionally, an effective budget often incorporates a "bottom-up" approach, where input from various levels within the organization is considered to ensure accuracy and feasibility (C).**Key Points:**1. **Attainable Objectives (A):** Setting realistic goals that can be achieved within the allocated resources and time frame.2. **Management Approval (B):** Ensuring that the proposed budget aligns with strategic aims and has the endorsement of key decision-makers.3. **Bottom-Up Development (C):** Engaging employees at all levels to enhance the accuracy and commitment to the budget.4. **Combined Approaches (D & E):** Recognizing that combining these practices (D) or applying all of them together (E) can further enhance budget effectiveness.This theoretical understanding is essential for anyone involved in budget planning and financial management.

Budget: It is financial plans in relation to the accomplishment of company objectives for a definite…

Answered: 3. For budgets to be effective: ) A.…

3. For budgets to be effective: ) A. Objectives should be attainable. B. There should be management approval. C. They should be developed from the "botto O D. Both A and B. O E. A. B. and S.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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Concept explainers

Master Budget

A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.

Sales Budget and Selling

A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.

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