Budget planning is an essential process for an organisation, with many advantages. However, there can be negative aspects to the budgeting process. The management accounting team of ABC plc wants you to discuss and provide examples of both of these aspects of budgeting.
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Budget planning is an essential process for an organisation, with many advantages. However, there can be negative aspects to the budgeting process. The
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- Which of the following is true in a bottom-up budgeting approach? Every expense needs to be justified. Supervisors tell departments their budget amount and the departments are free to work within those amounts. Departments budget their needs however they see fit. Departments determine their needs and relate them to the overall goals.Budgeting can be an important management tool if implemented properly. Identify several positive results when budgets are used properly. Since budgets affect people, identify several negative aspects if budgets are not implemented properly. Additionally, please discuss in detail how the budgeting process is essential to managers.Which one of the following best describes the role of top management in budgeting process? Top management Should be involved only in the approval process Lacks the detailed knowledge of the daily operations and should limit its involvement Needs to be involved, including using the budget process to communicate goals Needs to separate the budgeting process and the business planning process into two separate processes
- There are a number of benefits associated with budgeting. Which of the following is not frequently cited as a benefit of the budget process? Budgets help to monitor and control operations. Budget eliminates the opportunity for slack or padding within an organisation. Budgets provides a method of allocating and using resources within the organisation. Budget are an early warning system. They highlight where investigation and appropriate correction action is necessary.It is important for institutions to budget and to further have feedback by receiving regular budgetary control reports in order to facilitate budget centres take control action. The report may or may not be detailed but ideally should contain sufficient information in order to motivate individual managers. Reports to top managers can be exceptional in nature. It is also essential for companies to conduct forecasting as they conduct their business. Required: 1. Explain clearly the differences between forecasting and budgeting. Define the following terms: i. Single-loop feedback. ii. Double-loop Feedback.Which of the following statements are TRUE? I. Responsibility accounting attempts to assign blame for problems to a specific manager.II. One benefit of a budget is that it helps managers gather relevant information for improving future performance.III. Challenging budgets tend to motivate improved performance.IV. Controllability may be difficult to pinpoint because some costs are the result of the market, not the manager.
- Which of the following is not a benefit of budgeting? It allows for coordination between different departments within a firm. It compels managers to develop objectives and to plan allocating resources to achieve the objective. It provides performance evaluation and feedback. It reduces the need for analysis with regard to company expenses.Which of the following is NOT an objective of the budgeting process? Group of answer choices a - To communicate management's plans throughout the entire organization b - To ensure that the company continues to grow. c - To uncover potential bottlenecks before they occur d - To provide a means of allocating resources to those parts of the organization where they can be used most effectively.A budget represents a target and aiming towards a target can be a powerful motivator. However, whether the target will actually cause employees to do better is thought to depend on how difficult the target is perceived to be. Required Evaluate the motivational considerations that should be made in the setting up of a budgetary planning and control system.
- Which of the following is NOT true of the budgeting process? Question 8 options: Budgeting provides feedback to management to aid in assessing how well it's reaching its goals. Budgets force managers to plan for the future. Budgets force managers to consider relations among operations across the entire value chain. The performance report is prepared as part of the master budget.The following are advantages of budgeting, except Allocates resources of the company Define goals and objectives of the company Coordinates activities of the company Creates process bottlenecks please answer immediately :)Which of the following best describes the role of top management in the budgeting process? Should be involved only in the approval Should not necessarily have detailed knowledge of the daily operations and should limit their involvement Should be enthusiastic and committed to the budget process Separates the budgeting process and the business planning process please answer immediately :)