Budgets have many purposes. Which of the following is NOT a purpose of budgets?
ID: 2438794 • Letter: B
Question
Budgets have many purposes. Which of the following is NOT a purpose of budgets?
Help management plan and coordinate operations
Provide a means to control costs by setting spending limits
Provide a benchmark for future performance evaluation
Help improve disclosure to stockholders in financial reports
A.Help management plan and coordinate operations
B.Provide a means to control costs by setting spending limits
C.Provide a benchmark for future performance evaluation
D.Help improve disclosure to stockholders in financial reports
Explanation / Answer
Option D is right
Budgets doesnot help to improve disclosure to stock holders in financial reports.
Because budgets are used to control costs and expenditure by setting spending limits and used as a benchmark for future performance evaluation i.e comparing actuals with budget and evaluate the reasons for such variance and helps management to rectify it.