What Is the Role of Top Management in a Participative

question 15

Multiple Choice

What is the role of top management in a participative budgeting system?

• A) Top management has no role-the budget is entirely developed by the lower-level employees.
• B) Top management must always tighten employee-set budget standards to eliminate employees' attempts to build slack into the standards.
• C) Top management must ensure that employee-generated objectives are consistent with those of the company.
• D) All of the answers are correct.

---

Definitions:

Periodic system

A periodic system is an inventory management approach where inventory levels and the cost of goods sold are calculated at the end of each accounting period, rather than continuously.

Beginning inventory

This is the value of all the inventory (raw materials, work-in-process, and finished goods) that a company has at the start of an accounting period.

LIFO

An inventory valuation method that assumes the last items placed into inventory are the first ones sold; stands for Last In, First Out.

Cost

A payment of cash (or a commitment to pay cash in the future) for the purpose of generating revenues.