Why are budgets useful in the planning process?
A) They provide management with information about the company's past performance.
B) They help communicate goals and provide a basis for evaluation.
C) They guarantee the company will be profitable if it meets its objectives.
D) They enable the budget committee to earn their paycheck.

Question

Quizplus · Accepted Answer

Budgets are useful in the planning process because they help communicate goals and provide a basis for evaluation. By setting budget goals, management can establish a framework for making decisions and allocate resources effectively. Furthermore, by comparing actual results with budgeted amounts, management can evaluate performance and make necessary adjustments to improve future planning. Budgets help to establish accountability and ensure that resources are used efficiently to achieve organizational objectives.

Why Are Budgets Useful in the Planning Process