Budgetary Control Flashcards
0
Q
What is master budgeting?
A
- Summery of companies plans
- sets specific targets for departments
1
Q
What is a budget?
A
A budget is a planned outcome which a firm hopes to achieve
2
Q
What is department budgeting?
A
-will vary between departments depending upon need
3
Q
What is historic budgeting?
A
Where the years targets for costs and revenues are based upon last years figures
4
Q
What is zero budgeting?
A
Budgets are initially set at zero and each department has to justify their spending and negotiate funds
5
Q
What is maintenance budgeting?
A
Given a standard allowance and have to bid for large items
6
Q
What is allocated budgeting?
A
Senior staff allocate an amount to each department, depending on their needs
7
Q
How do businesses set budgets?
A
- market research
- guesstimate
- own experience
- instinct
8
Q
Advantages of budgeting?
A
- predict what an organisation thinks will happen
- appraise alternative courses of action
- sets targets
- monitor and control performance
- fundamental part of businesses planning
- motivational tool
- method of communication
- provide means of controlling income and expenditure
- act as a review (have they met budgets)
- provide targets
- can check returns by each department
9
Q
Disadvantages of budgeting?
A
- it is no substitute for good management
- may cause unnecessary pressure
- rigid financial plans may cause inertia
- may not reflect the reality of the business environment
- delays and time lags make it difficult to compare actual and budgeted results
- using planned figures (not actual)
- collecting info takes £ and co-operation
- time taken to collate
- conflict
- if actual results are too far from budget then they may lose importance
