Question

A. Evaluate the following statements.
1) Budgets drive accounting and financial reporting.
2) Budgets are the most significant document, not the annual report.
3) Capital Assets may neither produce revenue nor save cost.
4) Less distinction between internal and external accounting and reporting.

Answer 1

1) Budgets drive accounting and financial reporting.

The statement is correct. Budgets drive accounting and financial reporting indirectly by making control of expenditures.

2) Budgets are the most significant document, not the annual report.

The statement is incorrect. Budgets are internal documents of the company used by the company for its internal performance improvement and monitoring. whereas the annual report is a quite more important document as compared to budget.

3) Capital Assets may neither produce revenue nor save cost.

The statement is incorrect. capital assets produce revenue through manufacturing or products or providing services to customers

4) Less distinction between internal and external accounting and reporting.

The statement is correct. there should be less distinction between internal and external accounting and reporting.