Which statement about budgets is true?

Which statement about budgets is true?

• A. A summary of actual performance
• B. A plan for marketing campaigns
• C. A projection of inventories at year-end
• D. A plan that shows how managers expect to obtain and use resources

Answer: (D)

Budgets are forward-looking plans that show how managers expect to obtain and use resources. They translate goals into numbers, outlining anticipated revenues and costs and detailing the mix of resources—labor, materials, equipment, and overhead—and how those resources will be acquired and deployed over a period. This makes budgets a tool for planning and controlling operations, guiding decisions before actions occur. A summary of actual performance describes what happened, not what is planned. A plan for marketing campaigns is a part of budgeting but too narrow, since budgets cover all resources, not just marketing. A projection of inventories at year-end is similarly too narrow, focusing only on one area rather than the full plan of how all resources will be obtained and used.

Budgets are forward-looking plans that show how managers expect to obtain and use resources. They translate goals into numbers, outlining anticipated revenues and costs and detailing the mix of resources—labor, materials, equipment, and overhead—and how those resources will be acquired and deployed over a period. This makes budgets a tool for planning and controlling operations, guiding decisions before actions occur. A summary of actual performance describes what happened, not what is planned. A plan for marketing campaigns is a part of budgeting but too narrow, since budgets cover all resources, not just marketing. A projection of inventories at year-end is similarly too narrow, focusing only on one area rather than the full plan of how all resources will be obtained and used.