a) The budget preparation process involves the following steps:

1. Establish objectives: Align with strategic goals, e.g., BoG’s sustainable banking principles for Ghanaian banks.
2. Form budget committee: Involve key departments like finance and operations.
3. Identify limiting factors: Such as cash or labor constraints.
4. Prepare sales budget: As the starting point, forecasting revenue.
5. Prepare other functional budgets: Production, purchases, expenses.
6. Prepare master budget: Integrate into profit/loss, balance sheet, cash flow.
7. Review and approval: By management or board.
8. Monitor and control: Using variance analysis.
9. Revise if necessary: For changes like economic shifts post-DDEP.
10. Communicate: To all stakeholders for implementation.

This process ensures efficient resource allocation in banking operations.

b) Three advantages of Activity-Based Budgeting (ABB):

1. Aligns resources with activities driving value, improving cost efficiency in processes like loan processing.
2. Enhances accuracy by focusing on cost drivers, reducing waste.
3. Supports strategic decisions by linking budgets to business activities.

Two disadvantages:

1. Time-consuming and complex to identify and allocate activities.
2. Requires detailed data, which may not be available in smaller Ghanaian firms without advanced systems.