Which of the Following Statements About Budgeting Is False

question 73

Multiple Choice

Which of the following statements about budgeting is false?

• A) The master budget should only be prepared by top management.
• B) Budgeting forces managers to think ahead and formalize future objectives.
• C) Budgets help coordinate the activities of the entire organization.
• D) Budgeting is an aid to planning and control.
• E) Budgets create standards for performance evaluation.

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Definitions:

Expected Market Rate

The anticipated rate of return on an investment as predicted by investors based on historical market data and trends.

Abnormal Return

Return on a stock beyond what would be predicted by market movements alone. Cumulative abnormal return (CAR) is the total abnormal return for the period surrounding an announcement or the release of information.

Mean-Variance Optimizers

Tools used in finance to allocate assets in a portfolio in a way that maximizes return for a given level of risk based on the expected returns and variances of those assets.

Fully Informed

A state or condition where all relevant information is known to all parties involved.