Budgets are compared to actual results in order to incorporate better informed business strategies into their future planning decisions.

Question

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Budgets provide a framework for planning and predicting future financial performance. By comparing actual results with the budgeted amounts, businesses can identify areas where they may have over- or under-estimated revenue or expenses, and adjust their strategies accordingly for better performance in the future. This helps them make better informed business decisions and improve financial planning.

Budgets Are Compared to Actual Results in Order to Incorporate