Uncertainty and the Budgeting Process: As indicated in the text, the validity of pro-forma financial statements that are produced as part of the master budgeting process is affected by the accuracy of the forecasted data going into the component budgets.Such data are subject to various levels of uncertainty.For this reason, accountants need to understand ways of dealing with uncertainty in the budgeting process.
Required: Define and distinguish among the following ways of handling uncertainty in the budgeting process:
1.What-if analysis (give at least one concrete example)
2.Sensitivity analysis
3.Scenario analysis.

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The Answer of Uncertainty and the Budgeting Process: As indicated in the text, the validity of pro-forma financial statements that are produced as part of the master budgeting process is affected by the accuracy of the forecasted data going into the component budgets.Such data are subject to various levels of uncertainty.For this reason, accountants need to understand ways of dealing with uncertainty in the budgeting process.
Required: Define and distinguish among the following ways of handling uncertainty in the budgeting process:
1.What-if analysis (give at least one concrete example)
2.Sensitivity analysis
3.Scenario analysis.

Uncertainty and the Budgeting Process: as Indicated in the Text