2: Budgeting Flashcards
What does SWOT stand for?
Strengths
Weaknesses
Opportunities
Threats
Business planning is important to…
Setting goals and objectives to achieve these goals
Explain and give an example of a mission statement.
Purpose that serves to guide the business.
Eg ‘we will focus on building and improving the prospects of our customers, communities and partners in order to develop sustainable growth for the business.
5 aims a budget can provide
Purpose and direction Anticipate future events Connect and coordinate business activity Encourage challenging of acceptance Galvanise energy of staff Improve decision making process Competitive advantage and market recognition.
Main purpose a business should plan is to…
Reduce risk and cost
What is objective setting ?
Giving the business a target or goal.
SMART goal
What is strategic objectives and planning?
Determine the long term policies of the business. Done by high level, directors and executives
What is a strategic decision?
Decisions that determine the long term policies of the business which require formation of specific objectives.
What are operating decisions?
Those that focus on efficient use of resources available to the firm in short term.
Explain a budget.
A Written financial projection showing how activities and resources will be used during the period to achieve an organisations objectives.
What is cost leadership?
Strategy which sees a business able to sell products cheaper than other competitors.
List 5 of 7 purposes of budgets
Planning Coordination Communication Controlling Authorisation Motivation
What is a master budget?
Mir consists of all the interrelated budgets necessary to determine the key financial objectives of a business.
What is a operational budget?
Details descriptions of the incline and expenses of projected activists necessary to produce the desired profit levels. Eg sales, purchases, cost of sales, selling, admin, finance
Explain a performance budget
Once a budget period is over and actual outcomes are compared with budgeted the difference (variance) is evaluated to show quality of planning for future.
