Chapter 22, Problem 1E

Exercise 22-1

Budget consequences

C1

Participatory budgeting can sometimes lead to negative consequences. From the following list of outcomes that can arise from participatory budgeting, identify those with potentially negative consequences.

_______a. Budgetary slack will not be available to meet budgeted results.

_______b. Employees might understate expense budgets.

_______c. Employees might commit unethical or fraudulent acts to meet budgeted results.

_______d. Employees set sales targets too high.

_______e. Employees always spend budgeted amounts, even if on unnecessary items.

_______f. Employees might understate sales budgets and overstate expense budgets.