Select the incorrect statement about budgeting committees.
A)Budgeting committees usually have responsibility for the coordination of budgeting activities.
B) Membership on the budgeting committee is restricted most often to accountants because the budget involves numbers.
C) The budgeting committee is responsible for settling disputes between various departments over budget matters.
D) One of the responsibilities of the budget committee is to monitor the organization's progress toward achieving its budget standards.
B) Membership on the budgeting committee is restricted most often to accountants because the budget involves numbers.
Master budget preparation is normally supervised by a committee. The budget committee is responsible for settling disputes among various departments over budget matters. The committee also monitors reports on how various segments are progressing toward achieving their budget goals. The budget committee is not an accounting committee. It is a high-level committee that normally includes the company president, vice presidents of marketing, purchasing, production, and finance, and the controller.
Source: Survey of Accounting 3rd edition
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The incorrect statement about budgeting committees is B) Membership on the budgeting committee is restricted most often to accountants because the budget involves numbers.
To determine the correct statement, let's analyze each option:
A) Budgeting committees usually have responsibility for the coordination of budgeting activities.
This statement is correct. Budgeting committees are typically responsible for coordinating the budgeting process within an organization. They may oversee the collection of budget proposals, review and analyze financial data, and ensure that the budget aligns with the organization's goals.
B) Membership on the budgeting committee is restricted most often to accountants because the budget involves numbers.
This statement is incorrect. While it is common to have accountants involved in the budgeting committee due to their expertise in financial matters, membership is not strictly limited to accountants. Budgeting committees may include individuals from different departments with diverse backgrounds to ensure a comprehensive and holistic approach to budgeting.
C) The budgeting committee is responsible for settling disputes between various departments over budget matters.
This statement is correct. Budgeting committees often act as a mediator to resolve conflicts and disputes that may arise between different departments or functional areas regarding budget allocation. They help ensure that budget decisions are fair and serve the overall organizational objectives.
D) One of the responsibilities of the budget committee is to monitor the organization's progress toward achieving its budget standards.
This statement is correct. Monitoring and tracking the organization's progress towards meeting its budget standards is an essential responsibility of the budget committee. They assess actual financial performance against the budgeted targets, identify any deviations, and take corrective actions if necessary.
Therefore, the incorrect statement is B) Membership on the budgeting committee is restricted most often to accountants because the budget involves numbers.