Budgeting (Quick Revision)

Question 1

Define: Budgeting

Answer 1

Budgeting is a system of setting and monitoring financial targets.

Question 2

State three possible benefits of budgeting.

Answer 2

• Motivates
• Coordinates
• Mechanism of control

Question 3

State one way in which IT can benefit the budgeting process.

Answer 3

Easier to update/monitor budgets, e.g. using spreadsheets.

Question 4

State one possible problem of budgeting.

Answer 4

Superiors and subordinates may disagree over the targets.

Question 5

In what ways can IT be used to help the way products are developed and produced?

Answer 5

Computer-aided design and computer-aided manufacturing.

Question 6

What is the Examiner’s note for Budgeting?

Answer 6

As organisations grow, it becomes important to develop mechanisms to ensure good communication and keep control. Budgeting is one method; others include management by objectives and appraisals.

Question 7

What is the Evaluation point for Budgeting?

Answer 7

The value of budgeting depends on the way in which budgets are set (e.g. are they agreed or imposed?) and the levels at which they are set.