Question : Statement 1: Budgeting is a continuous process.
Statement 2: Budgets help in controlling financial activities.
Option 1: Both statements are correct.
Option 2: Only statement 1 is correct.
Option 3: Only statement 2 is correct.
Option 4: Neither statement 1 nor statement 2 is correct.
Correct Answer:
Both statements are correct.
Solution : The correct answer is (a) Both statements are correct.
Statement 1 is correct. Budgeting is not a one-time event; rather, it is an ongoing and iterative process that involves planning, monitoring, and adjusting financial activities over time. Continuous budgeting allows organizations to adapt to changes and make informed decisions.
Statement 2 is also correct. Budgets are comprehensive financial plans that include allocations for various resources, expenses, and revenues. They serve as a tool for controlling and managing financial activities within an organization.
Therefore, both statements are correct.
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