With Traditional Budgeting It Is Untrue That

question 7

Multiple Choice

With traditional budgeting it is untrue that:

• A) Many entities adopt policies so that departments lose authority over unspent budget amounts
• B) Adding an adjustment to last year's budget, as a means of planning, encourages managers to seek ways to use the organisation's resources more efficiently
• C) If actual costs are lower than budgeted costs next year's budget is often cut
• D) None of the statements are untrue

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Definitions:

Retained Earnings

The portion of a company’s profits that is kept or retained for reinvestment in the business, rather than being paid out as dividends to shareholders.

Book Value

The net value of a company's assets minus its liabilities and intangible assets, as recorded on the balance sheet.

Stock Split

A stock split is a corporate action where a company divides its existing shares into multiple shares to boost the liquidity of the shares, while the market capitalization remains unchanged.

Retained Earnings

The portion of net income not distributed to shareholders as dividends and instead reinvested in the business.