Multiple Choice
An asset promised as security until a loan is paid is called:
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1. Introduction to Accounting
Types of Accounting
Struggling with Financial Accounting?
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Which of the following is NOT a benefit of budgeting?
A
Assists in planning for future operations
B
Helps coordinate activities across departments
C
Ensures unlimited availability of resources
D
Provides a basis for performance evaluation
Verified step by step guidance1
Understand the concept of budgeting: Budgeting is a financial planning tool that helps organizations allocate resources, plan for future operations, coordinate activities, and evaluate performance.
Analyze the benefits of budgeting: Budgeting assists in planning for future operations by setting financial goals and outlining steps to achieve them. It helps coordinate activities across departments by aligning objectives and ensuring collaboration. It also provides a basis for performance evaluation by comparing actual results to budgeted expectations.
Identify the incorrect statement: The statement 'Ensures unlimited availability of resources' is not a benefit of budgeting because budgeting is about managing limited resources effectively, not guaranteeing unlimited resources.
Compare the incorrect statement with the other options: The other options ('Assists in planning for future operations,' 'Helps coordinate activities across departments,' and 'Provides a basis for performance evaluation') are valid benefits of budgeting.
Conclude that the correct answer is the statement that does not align with the purpose of budgeting, which is 'Ensures unlimited availability of resources.'
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