Budgetary Control

Question 1

What is the primary purpose of budgeting?

Answer 1

To plan, control, coordinate, communicate and authorize activities within an organization, aiming to align operations with strategic objectives.

Question 2

What are the advantages of rolling budgets?

Answer 2

• Continuously updated
• Provide current relevance
• Encourage ongoing planning
• Adapt to changing environments

Question 3

Disadvantages of zero-based budgeting?

Answer 3

• Very time consuming
• Can be perceived as overly controlling
• May deter long-term investments due to the need for annual justification

Question 4

What management behaviour issues arise with incremental budgeting?

Answer 4

• Complacency
• Perpetuating past inefficiencies
  Discourages seeking cost-saving or innovative opportunities due to reliance on historical data

Question 5

How does beyond budgeting compare in flexibility to traditional budgeting methonds?

Answer 5

It is more flexible, allowing organizations to quickly market changes and encouraging continuous improvement, unlike traditional methods that may be more rigid and slower to adapt.