Question

In: Accounting

Which of the following is not true of a properly executed budgetary cycle? Select one: a....

Which of the following is not true of a properly executed budgetary cycle?

Select one:

a. past performance and market feedback are considered in setting budget amounts

b.

during the fiscal year, managers investigate deviations from plans

c.

specific financial and nonfinancial expectations are set

d. deviations from plan are only investigated at the conclusion of the fiscal year as actual data can be finally compiled

Expert Solution

The Answer to this question is d.

Reason:The deviation from plan should be investigated on Timely basis(Monthly, Weekly or fairly short reporting period) but not at the end of the fiscal year as actual data can be finally compiled.

Actual data can also be compiled on monthly or weekly basis as we will get certain benefits from that like Timely variance Report if any, actions can be taken to get operations back out of control if they are shown to be out of control.

The other 3 options(a., b., c) are required for properly executed budgetary cycle.

Reason of a. : If we will considered past performance and market budget in setting budget amount we will get a serious attitude to the system and clear demarcation between areas if managers responsibility that will lead to effective budgetary control system.

Raeson of b. : If managers investigate deviation from plans we will get timely variance reports and we will take actions to get operations back under control if they are shown to be out of control.

Reason of c. If specific financial and non financial expectations are set we will give Reasonable budget targets and that will lead to effective budgetary control system.

Conclusion: d. Option is not true of a properly budgetary executed budgetary cycle.

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ekkarill92 answered 1 year ago

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