1.How are budgets developed ?

2. Are budgets part of the performance measurement system or the performance reward system?

3. What purposes are served by the budgeting process in a large firm?

4. Why would managers bias their forecasts when preparing a budget?

5. What is the ratchet effect?

6. Define static and flexible budgets. Discuss their advantages and weaknesses.

7. Define incremental and zero-based budgeting. Discuss their advantages and weaknesses.