Unit 19 Reading Activities Plus Questions

Read the following text and then complete the activities that follow.


Nobody likes the word 'budget' , but the truth is that without accurate budgeting and planning business could not exist. This is even more true in financial departments, such as accounting.

Budgets can represent one of the most important tools that a financial department has at their disposal, providing they are prepared in a realistic manner covering all areas of the business without errors of omission. One of the main benefits of a business budget is the ability to restrict and limit how much money is spent on a given operation. Budgets normally count expense accounts to make sure that capital is not being wasted on unneeded goods or that the company is not overpaying for materials used in the business. Limiting capital spent by the business may mean that owners and managers are forced to find new suppliers to acquire business inputs, thus saving money and meeting their budget.


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Quiz: Reading Questions

1. Management is aware of marginal cost and can see the margin of safety by using dynamic budgets drawn up by accounting professionals.
2. Companies go over their budget and set aside money at their disposal, designated for future projects.
3. Setting out a regulation that budgets must be referred to, before management can carry out with the production, is not a good idea.
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