ICAEW BIP · Chapter 6 · Question 1 of 11
Which of the following is NOT normally a purpose of budgeting?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) To guarantee that the organisation will achieve its profit target
Explanation
Budgets help to plan, co-ordinate, communicate, motivate, control and authorise. A budget is a plan expressed in financial terms; it cannot guarantee results, because actual conditions may differ from the assumptions it was built on.
More Budgeting: purposes and approaches MCQs
- Q3What is the main weakness of incremental budgeting?
- Q4Which of the following best describes zero-based budgeting?
- Q5A company prepares a 12-month budget and, at the end of each quarter, adds a further quarter so that a 12-month budget always exists. What…
- Q6Which of the following is a recognised disadvantage of participative (bottom-up) budgeting?
- Q7Activity-based budgeting (ABB) differs from traditional budgeting mainly because it: