Recently, New York State's Governor, Andrew Cuomo has requested the NY Legislature to consider "flexible" budget for the coming fiscal year (Links to an external site.). Although the "flexible" budget referred by Gov. Cuomo simply means allowing more revenue/spending flexibility of the state government (different from the "flexible budgets" discussed in Chapter 9), the underlying logic behind Gov. Cuomo's request is actually manifested by the "flexible budgets".

As we learned from Chapter 8 Master Budget, planning budgets are prepared based on the expected or forecasted customer demands and sales activities of a firm's products or services. Assuming a certain level of sales activities, other resource procurement and actual production activities are planned accordingly. However, the recent outbreak of Coronavirus COVID-19 levies an onerous burden to a firm's budget preparation.

Please read the attached WSJ. commentary and post your answers to the following questions on the forum.

1. How "uncertainty" is different from "risk"?

2. Please assume you are currently preparing an annual budget for Intuit, Inc., a producer of tax compliance software company. Does COVID-19 make you prepare multiple "flexible budgets"? Why or why not?

3. Please assume you are currently preparing an annual budget for Starbucks Corporation. Does COVID-19 make you prepare multiple "flexible budgets"? Why or why not?

4. Why do you think Gov. Cuomo is requesting a "flexible" budget?