Which of the Following Is NOT a Basic Function of a Budget

question 10

Multiple Choice

Which of the following is NOT a basic function of a budget?

• A) Budgets indicate the need for future short-term financing.
• B) Budgets provide the basis for corrective action when actual figures differ from the budgeted figures.
• C) Budgets compare historical costs of the firm with its current cost performance.
• D) Budgets allow for performance evaluation.

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Definitions:

Cash Flows

The overall volume of financial exchanges made into and from an organization, directly impacting its ability to cover short-term obligations.

Operating Activities

Operating activities relate to the primary activities of a business involving the production and delivery of goods and services, and are reflected in the cash flows from operations in financial reporting.

Financing Activities

Transactions with creditors and investors used to fund a company through borrowing or selling equity.

Return on Assets

A financial ratio that indicates how profitable a company is relative to its total assets, measuring how efficiently assets are used to generate profit.