Final answer:
The statement about budgets is true as they assist in financial planning, coordination, performance evaluation, and corrective actions. Budgeting can be difficult due to the need for discipline and making choices that involve opportunity costs.
Step-by-step explanation:
The statement that budgets help with planning, coordination, performance evaluation, and corrective action is true. A good budget serves multiple purposes in an organization or individual’s financial planning. It aids in planning by outlining expected income and expenses, which allows for setting goals and making informed decisions. Coordination is achieved as departments or individuals work together to adhere to the budget, ensuring that resources are allocated efficiently. Performance evaluation is facilitated by comparing actual figures to budgeted amounts, making it possible to assess how well financial objectives are being met. Lastly, budgets aid in corrective action by identifying areas where actual spending exceeds the budgeted amounts, signaling the need for adjustments to stay on track.
As for the reasons why budgeting can be difficult, it often involves making tough choices and sacrificing immediate gratification for long-term financial stability. The discipline required to forgo certain expenditures, like a daily coffee or entertainment subscriptions, in favor of sticking to a budget represents the opportunity cost and can be a challenging aspect of financial planning.