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Question 2

The most important element of the budgeting process is:

Click the button next to the correct answer choice. After you have read the feedback, explore the other choices. Note: Your first selection will be used in tallying your score.

  • The assessment of variances

  • Not the best choice. Though analyzing variances between what a budget says and what actually happens is eventually useful, it's not as important as the communication and planning that occur as managers formulate budgets. That's because creating a budget requires managers to consider longer-term goals, challenges, and opportunities facing the organization—all of which shape major decisions about how to respond.

  • The communication and planning that occur in formulating the budget

  • The best choice

    Correct choice. The planning and communication activities that take place in formulating a budget require managers to consider longer-term goals, challenges, and opportunities facing the organization—all of which shape major decisions about how to respond.

  • The end result

  • Not the best choice. Though analyzing the end result of a budget is eventually useful, it's not as important as the communication and planning that occur as managers formulate budgets. That's because creating a budget requires managers to consider longer-term goals, challenges, and opportunities facing the organization—all of which shape major decisions about how to respond.

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