A Level Accounting (9706)•9706/11/O/N/20
Explanation
Budgeting Controls Performance via Variance Analysis
Steps:
- Set financial targets in a budget based on business goals.
- Track actual results during operations.
- Compare actual performance against budgeted figures to identify variances.
- Analyze variances to take corrective actions for better control.
Why A is correct:
- Budgetary control is defined as the process of comparing actual results with budgeted standards to detect deviations and ensure performance aligns with plans.
Why the others are wrong:
- B: Competitor comparison aids benchmarking but not internal budgetary control.
- C: Industry averages provide external benchmarks, unrelated to budget-specific control.
- D: Historical comparisons track trends but ignore budgeted targets for proactive control.
Final answer: A
Topic: Budgeting and budgetary control
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