Budgeting is _______________________________. (Points : 1)
A an exact science
B going to involve the use of estimates
C not going to ever produce a variance if properly prepared
D never created using information from a previous period
ANSWER B
Yes, B.
The correct answer is B: Budgeting is going to involve the use of estimates.
To reach this answer, let's break down the question and the options:
A) Budgeting is an exact science: This option suggests that budgeting is a precise and accurate process with no room for approximation or estimates. However, this is not true as budgeting involves making predictions and estimates regarding future expenses and revenues.
B) Budgeting is going to involve the use of estimates: This option correctly acknowledges that budgeting requires estimating future costs, expenses, and revenues based on available information and predictions. Budgets are typically prepared using historical data and assumptions about future conditions.
C) Budgeting is not going to ever produce a variance if properly prepared: This option claims that a well-prepared budget will never deviate or differ from the actual financial results. However, this is not accurate as variances are common due to changing economic conditions, unforeseen events, and other factors.
D) Budgeting is never created using information from a previous period: This option states that budgets are never based on historical data or information. However, budgets are often developed using past financial information as a benchmark or reference point.
Considering the above analysis, option B correctly reflects the nature of budgeting that involves estimates and assumptions about future financial activities.