Answer (B) is correct . A budget is a realistic plan for the future expressed in quantitative terms. It is useful for planning, control, motivation, communication, and achieving goal congruence. As a planning tool, a budget forces management to evaluate the reasonableness of assumptions used and goals identified in the budgetary process. As a control tool, the budget provides a formal benchmark to be used for feedback and performance evaluation. As a communication tool, a budget serves to coordinate activities between management and subordinates and provides management with a means of dealing with uncertainty. Despite its advantages, a budget neither ensures improved cost control nor prevents inefficiencies.
Answer (A) is incorrect because Evaluation of assumptions and identification of goals is one of the planning advantages of budgeting.
Answer (C) is incorrect because A budget provides a benchmark for feedback and performance evaluation.
Answer (D) is incorrect because A budget serves communicating and coordinating functions.
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