Certified Internal Auditor (CIA) Part 3: Business Knowledge for Internal Auditing — Question 130

Which of the following types of budgets will best provide the basis for evaluating the organization's performance?

Answer options

• A. Cash budget.
• B. Budgeted balance sheet.
• C. Selling and administrative expense budget.
• D. Budgeted income statement.

Correct answer: D

Explanation

The budgeted income statement is the most relevant for evaluating an organization's performance as it provides a forecast of revenues and expenses, allowing for a comparison with actual results. The cash budget focuses on liquidity, the budgeted balance sheet reflects the financial position, and the selling and administrative expense budget centers on specific costs, none of which comprehensively assess overall performance like the budgeted income statement does.