Accounting U4 AOS2

Question 1

Budgeting

Answer 1

process of preparing a financial plan for a business
- can restrict spending in areas
- modified as necessary
- involves estimates and predictions
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Question 2

Influences on budgets

Answer 2

• past results?
• are any major business changes going to occur?
  new competitors?
• eliminating or introducing lines of inventory?

Question 3

Types of budgets

Answer 3

• Master budget
• Sales budget
• Purchases budget
• Labour budget
• Expense budgets

Question 4

Sales budget

Answer 4

includes estimated sales and anticipated selling prices
- links to cash inflows
- link to cash revenue
- sales not expected to be collected form accounts

Question 5

Capital budget

Answer 5

• plans replacement of assets
• involves NCAs: impacts budg bal sheet
• if cash paid for NCA: impacts budg cash flow
• dep’n then impacts budg inc statement

Question 6

Budgeted cash flow purpose

Question 7

Budgeted income statement purpose

Question 8

Budgeted balance sheet purpose

Question 9

Budget variance report

Question 10

Variance