Question

Which of the following statements does NOT reflect company budget?

A)	It represents the construction company’s best financial guess when defining future operations.

B)	It forecasts the cost to complete a construction project.

C)	It forecasts the account amounts found on the income statement at the end of the coming year.

D)	It is the key document when excising control over company costs and projecting company cash flow.

Answer 1

Statement (C) Which says' It forecasts the account amounts found on the income statement at the end of the coming year' is completely wrong as budget is only a best future projection of different types of expenditures and income of the the company and it can never be predicted with actual accuracy.So, It can never forecast the actual amount found on the income statement at the end of year so Statement (C) is FALSE.

Statement A is true as it is just the best financial guess.Statement B is also true as it can forecast the cost to complete. Statement D is also true as it helps in cost control by finding out the deviation of actual from estimated.