What is the main advantage of preparing a budget?
Answer and explanation
Correct answer: Planning income and expenses in advance
A budget is a financial plan prepared for a future period. It estimates expected income and expenses, helping the business decide how money should be allocated and where unnecessary spending can be controlled. It also supports comparison between planned and actual results. Hence, option A is correct; the other options are unrelated or opposite to the purpose of budgeting.
Frequently asked questions
What is the correct answer to this question?
Planning income and expenses in advance
Why is this the correct answer?
A budget is a financial plan prepared for a future period. It estimates expected income and expenses, helping the business decide how money should be allocated and where unnecessary spending can be controlled. It also supports comparison between planned and actual results. Hence, option A is correct; the other options are unrelated or opposite to the purpose of budgeting.
Which subject and chapter does this question cover?
This is a Class 11 Business Studies question. Chapter: Sources of Business Finance. Topic: Concept, nature and importance of business finance.
