Question

Which of the following is not a result of following a well-designed budgeting process? Multiple Choice Assurance of future profits. Improved performance evaluations. Improved coordination of business activities. Improved communication of management's action plans. Improved decision-making processes.

Answer 1

Assurance of future profits

Step-by-step explanation:

Budgeting refers to estimating a future cost or revenue as on today so as to reduce business uncertainty and achieve planned goals. For example, budgeted costs reveal the estimated costs that would be incurred in the near future.

Budgeting is based upon past figures and current trends so as to estimate the future prospects of an activity under consideration. Such an activity reveals the course of action and aids better planning for the future.

For instance, a cash budget reveals the cash surplus or defict which shall arise in the near future and such a budget draws a firm's attention towards the funds it will require in the near future and from what sources those can be raised.

Since budgeting is an estimate and cannot account for unforeseen business events whose indications did not exist at the time of preparing such budgets, it's results cannot guarantee or assure future profits to a business. It's purpose is to reduce uncertainity, it cannot altogether eliminate uncertainity.