Unless Properly Controlled, a "Bottom-Up" Budgeting Process Can Lead To

question 98

Multiple Choice

Unless properly controlled, a "bottom-up" budgeting process can lead to:

• A) Excessively tight (i.e., difficult-to-achieve) budgets.
• B) Easy budget targets.
• C) Excessive downward communication.
• D) Reduced incentives for participation.
• E) Reduced levels of "budgetary slack."

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Definitions:

Current Ratio

A liquidity ratio that measures a company's ability to pay short-term obligations or those due within one year, calculated by dividing current assets by current liabilities.

Quick Ratio

A liquidity measure that indicates a company's ability to cover its short-term liabilities with its most liquid assets, without selling inventory.

Liquidity

The ease with which an asset, or security, can be converted into ready cash without affecting its market price.

Asset Management

The process of effectively managing and investing in assets to increase their value or yield.