Potential Problems That Can Limit the Benefits of Budgeting Do

question 63

Multiple Choice

Potential problems that can limit the benefits of budgeting do NOT include ________.

• A) low levels of employee participation in the budget process
• B) incentives to lie and cheat in the budget process
• C) difficulties in obtaining accurate sales forecasts
• D) an emphasis on functional budgeting

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Definitions:

Discounts Lost

Refers to the additional cost a company incurs for not taking advantage of the cash discounts offered by suppliers for early payments.

Net Method

The Net Method is an accounting procedure that records the purchase of goods or services after deducting any discounts for early payment.

Internal Control

The process implemented by a company to ensure the integrity of financial and accounting information, promote accountability, and prevent fraud.

Purchase Discounts

A reduction in the price of goods bought, usually for early payment or in bulk quantity.