Asked by Potiere Nmenie on May 27, 2024
Verified
In preparing and using any budget, it is important that managers keep in mind the
A) assumptions and predictions upon which the budget is based.
B) present value of future cash flow.
C) budgeted profit and loss statement.
D) 'bottom line'.
Assumptions And Predictions
The process of making educated guesses or hypotheses about future events based on current or past information.
Budgeted Profit
The expected profit planned in a budget, calculated as anticipated revenues minus planned expenses.
Present Value
The current worth of a future sum of money or stream of cash flows, given a specified rate of return.
- Recognize the significance of keeping in mind the assumptions and predictions upon which a budget is based.
Verified Answer
JS
jessie spurginMay 27, 2024
Final Answer :
A
Explanation :
Managers need to be aware of the assumptions and predictions upon which the budget is based because any changes to these factors can greatly impact the actual results compared to the budgeted projections. This allows managers to make adjustments and better understand the reasons for any variances between the budget and actual results. The other options (B, C, and D) are also important considerations in budgeting, but understanding the assumptions and predictions is crucial to making an accurate and effective budget.
Learning Objectives
- Recognize the significance of keeping in mind the assumptions and predictions upon which a budget is based.
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