A limitation of financial budgets is that they can hide inefficiencies if based solely on precedent rather than on periodic evaluation of circumstances and standards.

Question

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Financial budgets that are based solely on precedent may not take into account changes in circumstances or evolving standards. This can lead to hidden inefficiencies that are not addressed or improved upon, as the budget simply continues to follow the same old patterns. Periodic evaluation and adjustment of budgets is important to ensure ongoing accuracy and effectiveness.

A Limitation of Financial Budgets Is That They Can Hide