Participative budgeting:
I. Occurs from the bottom up
II. Motivates employees to buy into the budgeting process
III. Provides managers with incentives to build in budgetary slack
A) I only
B) I and II only
C) I, II, and III
D) II only

Question

Quizplus · Accepted Answer

Participative budgeting indeed occurs from the bottom up, as it involves employees at various levels in the budget-making process. It motivates employees by giving them a sense of ownership over the budget, thereby increasing their commitment to meeting budgetary goals. However, it also provides managers with an opportunity to build in budgetary slack, as they may overestimate expenses or underestimate revenues to create a buffer that makes it easier to achieve budget targets.

Participative Budgeting: I. Occurs from the Bottom Up