3. Which of the following is false with regard to budgetary planning? a. The sta

Question

3. Which of the following is false with regard to budgetary planning? a. The starting point for the budgets of a not-for-profit organization is generally b. A merchandising company uses a purchases budget instead of a production c. Budgets may be used by manufacturing companies, merchandising companies d. For a service enterprise, the critical factor in budgeting is coordinating professional receipts, rather than expenditures. budget service enterprises, and not-for-profit organizations. staff needs with anticipated services.

Explanation / Answer

A Budget is an estimation of the future income and expenses activities so that the company can work in proper direction to achieve those set goals. The clarity of the vision is one the reasons of making a budget. Budget is something which is used by everyone in his life. whether it is a company or he is an individual. Everyone forecasts it's income and expenses and make a financial budget.

Correct answer is a). - The not for profit organizations are mainly concerned about the proper applications of their funds which are raised by donantions charity etc. They are not doing business but are working for welfare. Their main focus area is their expenses but not the income. Thus option (a) is false.

(b) is true as a merchandising company do not manufacture anything, they simply buy the product and sell those into the market. Thus it is pretty clear they dont make any production budget instead will make a purchase budget.

(c). Budgets are used everywhere, whether it is a big company or a small individual.

(d). is true with regard to service industry.

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