Chapter 6, End of Chapter, Questions, Exercise 6-1

Budgeting is a process of designing and implementing the budgets in an organization. The following are the elements of budgeting cycle: 

• The first element includes planning the performance of the company based on what is expected. This planning is generally done with the agreement of the management.
• The second element includes measuring the actual performance against the planned results or the budget.
• The third element includes the investigation of variations that occur between the actual results and the expected results.
• The fourth element includes planning the operations as per the feedback received and making modifications based on the changed circumstances.