Budgeting Enables Planning and Control in Business

Steps:

• Identify primary purposes of budgets: planning future activities, setting performance targets, monitoring actual vs. planned results, and coordinating departments.
• Match these to options: assume 1=planning, 2=control, 3=evaluation, 4=legal compliance (less central).
• Select combination covering core reasons: 1,2,3 align with standard budgeting goals.
• Confirm A includes all essential purposes without extraneous ones.

Why A is correct:

• Budgets primarily plan (1), control costs/operations (2), and evaluate performance (3), per accounting principles like those in managerial accounting.

Why the others are wrong:

• B includes 4 (e.g., compliance), which is secondary, not core.
• C omits 3 (evaluation), missing performance assessment.
• D excludes 1 (planning), ignoring forward-looking strategy.

Final answer: A