Question

Budgets are used for two distinct purposes: ______ and ______. The first of these purposes relates to developing goals and preparing various budgets, while the second involves comparing actual results to the budget.

Multiple choice question.
- leading; controlling
- planning; controlling
- directing; planning
- directing; leading

Answer 1

Budgets serve two main purposes: planning and controlling. Planning involves setting financial goals and resource allocation, while controlling compares actual results to budgeted figures for performance assessment.

Step-by-step explanation:

Budgets are crucial tools used by individuals, businesses, and governments to manage finances effectively. They are used for two distinct purposes: planning and controlling. The first purpose, planning, involves developing goals and preparing various budgets to forecast financial outcomes and allocate resources accordingly. The second purpose, controlling, includes the act of comparing actual financial results to the budgeted figures to assess performance and make necessary adjustments. Effective budgeting allows for the identification of wasteful expenditures, facilitates achieving financial goals, and helps navigate through the complexities of economic decisions.