A budget is a benchmark against which actual performance can be prepared. It is a financial plan that outlines the expected revenues, expenditures, and goals for a specific period. By comparing actual results to the budget, management can evaluate performance and make necessary adjustments to achieve their goals. The other options do not accurately describe a budget.

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A Budget

Question 53

Multiple Choice

A budget:

A) is the qualitative expression of a proposed plan of action by management.
B) is the band range of relevant activity level or volume in which there is a specific relationship between the level of activity or volume and the cost in question.
C) occurs when purchase materials and components are converted into various finished goods.
D) is a benchmark against which actual performance can be prepared.
E) comprises taking actions that implement the planning decisions,deciding how to evaluate performance,and providing feedback and learning to help future decision making.

Correct Answer: