Future Business Leaders of America (FBLA) Business Management Practice Test

What is considered the most widely used control device in management?

1. Cost-benefit analysis

2. Budget

3. Financial ratio

4. Supervisory control

The correct answer is: Budget

The budget is considered the most widely used control device in management because it serves as a comprehensive plan that outlines an organization’s financial goals and the allocation of resources necessary to achieve them. It provides a framework for measuring financial performance against the expected outcomes, allowing managers to monitor progress, identify deviations, and make informed decisions. Budgets facilitate planning, coordinating activities, and controlling expenditures within an organization. They establish financial targets for various departments or projects, enabling managers to hold teams accountable for their financial performance. Additionally, budgets can help prioritize resource allocation, guiding investment in key areas while ensuring overall financial stability. By comparing actual financial performance to budgeted figures, managers can quickly assess whether an organization is on track to meet its goals and take corrective actions as needed. Other methods like cost-benefit analysis, financial ratios, and supervisory controls are important in their own right, but they do not provide the same comprehensive overview of an organization's financial activities or serve as a central tool for guiding the organization’s financial management practices.