Question
Why is budgeting important in business finance?
It avoids tracking income
It helps plan and control financial resources
It eliminates the need for financial institutions
It helps increase expenses
It avoids tracking income
It helps plan and control financial resources
It eliminates the need for financial institutions
It helps increase expenses
Answers
Answered by
GPT-5 mini
Correct answer: It helps plan and control financial resources.
Why: A budget forecasts revenues and expenses, allocates funds to priorities, monitors performance against targets, controls costs, and supports cash‑flow management and decision making.
Why the others are wrong:
- "It avoids tracking income" — incorrect: budgeting requires tracking income and expenses.
- "It eliminates the need for financial institutions" — incorrect: businesses often still need banks, lenders, and other financial services.
- "It helps increase expenses" — incorrect: budgeting is meant to control and optimize spending, not raise it.
Why: A budget forecasts revenues and expenses, allocates funds to priorities, monitors performance against targets, controls costs, and supports cash‑flow management and decision making.
Why the others are wrong:
- "It avoids tracking income" — incorrect: budgeting requires tracking income and expenses.
- "It eliminates the need for financial institutions" — incorrect: businesses often still need banks, lenders, and other financial services.
- "It helps increase expenses" — incorrect: budgeting is meant to control and optimize spending, not raise it.