Which of the Following Is a Disadvantage of Participative Budgeting

question 14

Multiple Choice

Which of the following is a disadvantage of participative budgeting?

• A)It is considering to be rolling throughout each budget period.
• B)Managers may pad the budget.
• C)It is a method of tactical planning.
• D)It requires each amount to be justified each budget period.

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Definitions:

Pretax Return

Pretax Return refers to the earnings of a company before the deduction of taxes, often used to analyze profitability from core operations.

Net Present Value

A method used in capital budgeting to assess the profitability of an investment, calculating the difference between the present value of cash inflows and outflows.

Additional Working Capital

Refers to the extra funds a business requires for its day-to-day operations, beyond its current operational needs.

Salvage Value

The anticipated end-of-service-life residual value of an asset.