3.5.2.1 Analysing Financial Performance: Reasons for setting budgets. Flashcards
1
Q
What are the reasons for setting budgets?
A
To gain financial support.
To ensure that a business does not overspend.
To establish priorities
To encourage delegation and responsibility and to motivate staff.
To assign responsibility.
To improve efficiency. `
2
Q
What are the problems of setting budgets?
A
Managers lack knowledge about divisions or departments.
Problems in gathering information.
Unforeseen changes.
Level of inflation is not easy to predict.
Budgets may be imposed.
3
Q
What are the features of good budgeting.
A
Consistent with overall aims.
Based on many opinions.
Challenging but realistic targets.
Monitored at regular intervals, allowing for changes in the business and its environment.
Be flexible.
