Which of the following statements is incorrect concerning budget preparation? A. The rolling budget approach is not often used in practice because it requires that management be in perpetual budgeting mode. B. If a zero-based budgeting approach is used, the annual budgeting process begins with a review of the results of the prior operating period. C. If a participative approach is used to prepare budgets, all levels of management are involved in the budgeting process. D. The preparation of the sales budget is the starting point in the budgeting process for all companies. E. Participative budgeting increases the risk that employees will create budgetary slack.
Which of the following statements is incorrect concerning budget preparation? A. The rolling budget approach is not often used in practice because it requires that management be in perpetual budgeting mode. B. If a zero-based budgeting approach is used, the annual budgeting process begins with a review of the results of the prior operating period. C. If a participative approach is used to prepare budgets, all levels of management are involved in the budgeting process. D. The preparation of the sales budget is the starting point in the budgeting process for all companies. E. Participative budgeting increases the risk that employees will create budgetary slack.
Chapter7: Budgeting
Section: Chapter Questions
Problem 11MC: Which of the following statements is not correct? A. The sales budget is computed by multiplying...
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Concept explainers
Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
Question
Which of the following statements is incorrect concerning budget preparation?
The rolling budget approach is not often used in practice because it requires that management be in perpetual budgeting mode.
If a zero-based budgeting approach is used, the annual budgeting process begins with a review of the results of the prior operating period.
If a participative approach is used to prepare budgets, all levels of management are involved in the budgeting process.
The preparation of the sales budget is the starting point in the budgeting process for all companies.
Participative budgeting increases the risk that employees will create budgetary slack.
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