[amp_mcq option1=”advantages of budget” option2=”disadvantages of budget” option3=”advantages of costing method” option4=”disadvantages of costing method” correct=”option1″]
The correct answer is A. advantages of budget.
A budget is a financial plan for a specific period of time, such as a year. It helps to ensure that a company has enough money to cover its expenses and achieve its goals. A budget can also help to identify areas where costs can be reduced.
There are many advantages to having a budget. Some of the most important advantages include:
- Compelling strategic plan: A budget can help to ensure that a company is on track to achieve its strategic goals. By setting financial targets and tracking progress, a budget can help to keep a company on track.
- Promoting coordination: A budget can help to promote coordination between different departments within a company. By having a common set of financial goals, departments can work together more effectively to achieve those goals.
- Providing framework of performance: A budget can provide a framework for measuring performance. By tracking actual results against budget, a company can identify areas where it is doing well and areas where it needs to improve.
There are also some disadvantages to having a budget. Some of the most common disadvantages include:
- Inflexibility: A budget can be inflexible, making it difficult to respond to changes in the market or the economy.
- Time-consuming: Creating and maintaining a budget can be time-consuming.
- Stressful: Creating and meeting a budget can be stressful for some people.
Overall, the advantages of having a budget outweigh the disadvantages. A budget can help a company to achieve its strategic goals, promote coordination, and provide a framework for measuring performance.