Budgeting Enables Business Planning and Control

Steps:

• Identify common purposes of budgets: planning resources, monitoring performance, and coordinating activities.
• Match these to options: assume 1=planning, 2=control, 3=coordination based on standard accounting principles.
• Evaluate choices: A includes all valid reasons, while others exclude at least one.
• Confirm A as correct since all three purposes are essential for effective budgeting.

Why A is correct:

• Budgets serve planning (forecasting), control (variance analysis), and coordination (aligning departments), per managerial accounting definitions.

Why the others are wrong:

• B excludes 3, ignoring coordination's role in unified operations.
• C excludes 2, overlooking control's importance in performance evaluation.
• D excludes 1, neglecting planning's foundational purpose for future strategy.

Final answer: A