Budgetary Control System Statements

Steps:

• Identify key features of budgetary control: planning, monitoring variances, corrective actions, and performance evaluation.
• Evaluate statement 1: Incorrect, as budgets are flexible tools, not rigid.
• Evaluate statement 2: Correct, budgets set standards for comparing actual results.
• Evaluate statement 3: Incorrect, control involves ongoing adjustments, not just annual reviews.
• Evaluate statement 4: Correct, variances highlight deviations needing management response.

Why D is correct:

• Budgetary control defines standards (statement 2) and uses variances for corrective action (statement 4), per standard accounting principles.

Why the others are wrong:

• A: Includes incorrect statement 1 on rigidity.
• B: Includes incorrect statement 1.
• C: Includes incorrect statement 3 on review frequency.

Not enough information on exact statements, but based on typical definitions.

Final answer: D