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20-2QS-6

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Financial & Managerial Accounting
Found in: Page 913
Financial & Managerial Accounting

Financial & Managerial Accounting

Book edition 7th
Author(s) John J Wild, Ken W. Shaw, Barbara Chiappetta
Pages 1096 pages
ISBN 9781259726705

Short Answer

For each of the following items 1 through 6, indicate yes if it describes a potential benefit of budgeting or no if it describes a potential negative outcome of budgeting.

6. Budgets can provide incentives for good performance.

Yes

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Step by Step Solution

Introduction

Incentives are the type of compensation offered by the organization to its employees and their monthly salary for outstanding performance.

Reason

Suppose an employee is working towards a task, keeping in mind the budget and the availability of resources that lead to a good performance and benefit the firm immensely. In that case, the management provides incentives as a token of appreciation in monetary terms.

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