The Main Way in Which Budgets Provide a Means of Control

question 44

Multiple Choice

The main way in which budgets provide a means of control in an organisation is by:

• A)setting budget targets which are attainable.
• B)senior managers controlling lower level managers.
• C)comparing actual performance with budgeted performance.
• D)setting budget targets which will be difficult to attain.

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Definitions:

Ratio Analysis

A quantitative analysis of information contained in a company's financial statements, used to evaluate financial health, performance, and trends.

Interpretation

Interpretation involves the process of explaining the meaning of information or data, often requiring a detailed analysis to translate complex information into more understandable terms.

Acid-Test Ratio

A financial metric that measures a company's ability to pay off its current liabilities with its most liquid assets, without relying on inventory.

Debt Ratio

A financial ratio that measures the proportion of total debt to total assets, indicating the company's leverage and financial health.