Budgeting forms part of the ______ and ______ functions of management?
a. Controlling and Supervising
b. Leading & Management
c. Planning & Controlling
d. All of the above
Answer (2)
Budgeting is integral to the planning and controlling functions of management. It helps in resource allocation during planning and serves as a benchmark for performance monitoring in controlling. The correct answer is option c, Planning & Controlling.
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The correct answer to the question is c. Planning & Controlling .
Budgeting is a fundamental component of the management process in business and organizational settings. It plays a crucial role in the following functions:
Planning :
Budgeting is primarily part of the planning function. It involves preparing detailed financial forecasts, which help in making decisions about how resources should be allocated for future activities.
During the budgeting process, management establishes goals and objectives, determining the necessary steps to achieve them. This creates a roadmap for the organization's financial and operational activities for a specified period.
Controlling :
Budgeting also functions as a controlling tool, where it helps managers monitor the financial activities of the organization to ensure that they align with the planned objectives.
By comparing actual performance with budgeted figures, management can identify variances, understand why they occurred, and take corrective actions to address them. This helps in ensuring that the organization's goals are met effectively and efficiently.
Thus, budgeting serves as a critical link in both the planning and controlling stages of management, ensuring that the organization can strategically set, execute, and monitor its financial activities.
