What Is the Role of Top Management in a Participative

question 15

Multiple Choice

What is the role of top management in a participative budgeting system?

• A) Top management has no role-the budget is entirely developed by the lower-level employees.
• B) Top management must always tighten employee-set budget standards to eliminate employees' attempts to build slack into the standards.
• C) Top management must ensure that employee-generated objectives are consistent with those of the company.
• D) All of the answers are correct.

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Definitions:

Aggressive Revenue

Recognition of revenue in a way that may artificially inflate sales figures, often bending the rules of standard accounting practices.

Fair Value Option

The choice given to entities to report certain financial assets and liabilities at their fair value to measure change in their value.

Financial Instrument

An agreement resulting in a financial asset for one party and a financial obligation or equity security for another.

Receivables Recognition Irregularities

Irregularities or anomalies in recognizing receivables that may involve premature or improper revenue recognition, affecting the financial statements' accuracy.