Authoritative / Participative Budgeting: “Authoritative (imposed) budgeting” is a top-down process of budgeting, in which managers set the goals and communicate to subordinates. However, “participative budgeting” represents a bottom-up approach that involves all levels of people in the company in the budgeting process. Authoritative budgeting is better for decision-making control but does not provide a commitment of subordinates. On the other hand, participative budgeting provides more realistic goals, because subordinates have in-depth knowledge of what can be done in the field. Additionally, they become more motivated and less fearful about reaching the targets. However, management should ensure that the goals determined by employees are in line with the long-term goals of top management.

As also understood from the information given, the statements about Authoritative / Participative Budgeting in the options I and II are correct, so the answer is A. The statement in the option III is not correct because of the fact that authoritative budgeting is better for decision-making control but does not provide a commitment of subordinates. The statement in the option IV is not correct because of the fact that participative budgeting provides more realistic goals, because subordinates have in-depth knowledge of what can be done in the field.