Which of the following is not necessary for budgets to be effective?

题目解析

Question

Which of the following is not necessary for budgets to be effective?

题目解析

BlackTom AI · Accepted Answer

Question restatement: Which of the following is not necessary for budgets to be effective?

Option 1: All budgeted amounts must be spent to ensure that budgets aren’t reduced for the next period.
- This is not a necessary condition for budget effectiveness. In fact, spending all budgeted amounts can indicate constraints on resources or poor budgeting, but effective budgets focus on guiding decisions and performance, not on spending every allocated amount. Unspent variances can occur and still reflect a healthy, accurate budgeting process.

Option 2: Employees affected by a budget should help prepare it.
- Involvement of those impacted by a budget typically improves buy-in, accuracy, and practicality. Their input helps ensure the budget reflects operational realities and is more likely to be adhered to. This is generally considered a best practice for budget effectiveness.

Option 3: Evaluations offer opportunities to explain differences between actual and budgeted amounts.
- Regular evaluation and variance analysis are central to budgeting control. They help management understand causes of deviations and adjust forecasts or operations accordingly. This is a core component of an effective budgeting process.

Option 4: Managers must be aware of potential negative outcomes of budgeting, such as budgetary slack.
- Awareness of budgetary slack (where managers understate expected performance or overstate required resources) is important to maintain budget integrity. This vigilance supports effective budgeting by reducing bias and ensuring realistic targets.

Option 5: Goals reflected in a budget should be challenging but attainable.
- Setting challenging yet attainable goals aligns with motivational and control objectives, driving performance while avoiding demotivation or constant overrun. This is widely viewed as a key characteristic of effective budgeting.

Summary: Among the options, the notion that all budgeted amounts must be spent is not a requirement for a budget to be effective; budgets are about guiding decisions, planning, and controlling performance, not forcing exhaustively depleting all resources. The other statements describe practices associated with effective budgeting, such as involvement, variance analysis, awareness of slack, and appropriately challenging targets.

Which of the following is not necessary for budgets to be effective? 题目解析

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