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Explain limitations of budgets.
Limitations of Budgets:
(i) Since budget is based on calculates approximately, that is, estimated sales, estimated business conditions and estimated costs. It may require periodic revisions since estimates may not come out to be percent true.
(ii) A budget may not work when the idea of budgeting is not sold appropriately to different sections of the business. Only the persons working in various sections can make an established budget, a success. Therefore, it should be a cooperative budgeting.
(iii) A budget cannot work till the desire to make this work is established in the minds of persons working in the various sections of a business concern.
1. A venture capitalist company had invested in five new businesses during the last year. The results at the end of one year were as follows: Business A: Loss $500,000, Business B:
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