Budgeting Involves Realistic, Challenging Plans for Performance

Steps:

• Recall that budgeting is a planning tool aligning resources with strategic goals.
• Evaluate each statement against core budgeting principles: planning, control, coordination, and motivation.
• Identify statements promoting realistic, achievable yet challenging targets.
• Select the option contradicting these by suggesting overly easy goals for appearance.

Why C is correct:

• Budgets must be realistic and challenging to motivate efficiency and improvement, per standard management accounting definitions, not "easily achieved" to fake performance.

Why the others are wrong:

• A applies: Budgets directly support and detail management strategic objectives as forward-looking plans.
• B applies: Comparing budgeted to actual results enables variance analysis for corrective actions.
• D applies: Effective budgeting requires communication and coordination across all management levels for alignment.

Final answer: C