Budgets are ___________________________. (Points : 1)
A a tool for management to use to penalize managers with poor performance
B detailed financial plans that quantify future expectations and actions
C busy work assigned to keep department managers from wasting valuable time on personal chores
D a performance management tool that is automatically created by a firms accounting system once sales figures for the year are known.
ANSWER B
I agree.
To determine the correct answer, we can break down each option and evaluate its accuracy.
A) "A tool for management to use to penalize managers with poor performance."
This option suggests that budgets are used solely as a means of punishment for underperforming managers. While budgets can indeed be used to evaluate performance, their primary purpose is not to penalize managers. Therefore, Option A is incorrect.
B) "Detailed financial plans that quantify future expectations and actions."
This option accurately describes what budgets are. Budgets are comprehensive financial plans that quantify expectations and actions for a specific period, such as a year or quarter. They outline projected income, expenses, and strategies to achieve financial goals. Therefore, Option B is correct.
C) "Busy work assigned to keep department managers from wasting valuable time on personal chores."
This option suggests that budgets are merely designed to keep managers occupied and prevent them from engaging in personal tasks. This is an inaccurate representation of budgets, as their purpose is much more significant than merely filling time. Therefore, Option C is incorrect.
D) "A performance management tool that is automatically created by a firm's accounting system once sales figures for the year are known."
This option suggests that budgets are automatically generated based on sales figures and serve as a performance management tool. While budgets can play a role in performance evaluation, they are not solely created based on sales figures or automatically generated. Therefore, Option D is incorrect.
In conclusion, after evaluating each option, we can determine that the correct answer is Option B: "Detailed financial plans that quantify future expectations and actions."