The principal negative consequence of incremental budgeting isthat money may be allocated to a unit...

The principal negative consequence of incremental budgeting is that money may be allocated to a unit in the future merely because the unit had been allocated money in the past.

True or False

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ANSWER

TRUE

Incremental budgeting can result in unnecessary spending for a company. The reason behind this is that the departments within a company generally tend to spend all the money that they’ve been allocated in a budget one year in order to obtain a greater amount of money in the next budgeting period. Incremental budgeting takes the position of increasing each part of the budget by a certain amount each year. However, some departments may not, in fact, need more money each year – but they will be allotted an increase anyway, simply because that’s how the budgeting process works. In this way, the budgeting process may be wasteful and less than optimally efficient.

jeff jeffy answered 2 years ago

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