Why Are Budgets Useful in the Planning Process

question 177

Multiple Choice

Why are budgets useful in the planning process?

• A) They provide management with information about the company's past performance.
• B) They help communicate goals and provide a basis for evaluation.
• C) They guarantee the company will be profitable if it meets its objectives.
• D) They enable the budget committee to earn their paycheck.

---

Definitions:

Unincorporated Business Association

A group engaged in business without the formalities and legal protections of incorporation, such as partnerships or sole proprietorships.

Limited Liability

Limited Liability is a legal structure that limits an owner's or shareholder's personal liability for a company's debts and obligations.

General Partners

Members of a partnership who are responsible for the management of the partnership, have full authority to bind it, and face unlimited personal liability for its debts.

Limited Partners

Individuals in a partnership who invest money but do not have management responsibilities and whose liability is limited to the amount of their investment.