The finance department of a large company has prepared a master budget with very limited expense budgets for each department. The department managers are worried about being held accountable for these assigned targets, but senior management wants to keep spending reduced to allow for contingencies and strategic adjustments to the company-wide master budget. Based on this information, this budget process is

Group of answer choices.

A. A successful budgeting process because it will be a very useful tool to hold people accountable for overspending.

B. A successful budgeting process because it will encourage the associates to work their hardest to meet the goals.

C. Not a successful budgeting process because management has left too much room for strategic unknowns.

D. Not a successful budgeting process because it has not been widely accepted by the employees.

D. Not a successful budgeting process because it has not been widely accepted by the employees.

Explanation:

A budget is a financial plan used for the estimation of revenue and expenditures of an individual, organization or government for a specified period of time, often one year. Budgets are usually compiled, analyzed and re-evaluated on a periodic basis.

A master budget is a document that contains the aggregation of all lower-level, interrelated financial budgets and operating budgets produced by an organization and it typically comprises of a cash forecast, budgeted financial statements, profit and loss account and balance sheet and a financing plan.

Furthermore, the first step of a budgeting process is to prepare a list of each type of income and expense that will be integrated or infused into the budget. Thus, it is of utmost importance to know total income (inflows) and expenses (outflows).

In the same vein, the final step to be made by the management of an organization in the financial decision-making process is to make necessary adjustments to the budget.

Based on the information in the above passage, the budget process is not a successful budgeting process because it was prepared with very limited expense budgets for each department and has not been widely accepted by the employees.

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