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ACCA Applied Skills · Performance Management · Budgetary systems and types of budget

A company's managers each prepare their own budgets and submit them to senior management for review and approval. What is this approach called?

This is participative budgeting. Managers who will be responsible for the budgets prepare them and submit them for senior management review, which increases their motivation and commitment, unlike imposed budgeting where targets are set from the top down.

  1. AImposed budgeting
  2. BParticipative budgetingCorrect
  3. CZero-based budgeting
  4. DIncremental budgeting

Explanation

In participative (bottom-up) budgeting, the managers responsible for the budget are involved in setting it, then it is reviewed and approved by senior management. Imposed budgeting is top-down. Zero-based and incremental describe how figures are derived, not who sets them.

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