Budgetary Control Systems Glossary Flashcards
What is a budget?
A formalised numerical plan for the future actions of an organisation. It helps management perform their duties by way of: planning, cost control, motivation authorisation and co-ordination.
What is goal congruence?
When the aims of departments are consistent with the strategic plan of the organisation.
What is a strategic plan?
This sets out the overall strategy of the organisation over the next few years, including medium to long term aims.
What is an operational plan?
These are shorter aims or budgets to achieve the organisations long term aims.
What is a budget manual?
Set of detailed instructions of how the budget should be prepared including reasons for assumptions.
What is a budget committee?
This is a committee of senior executives from all areas of the business who oversee the preparation of the budget.
What is a budget officer?
An accountant who helps the budget committee in preparation of the budgets.
What is a budget holder?
The manager responsible for preparing a resource budget and submitting it to the budget committee.
What is a master budget?
A budgeted income statement, budget statement of financial position and budgeted cash budget all prepared from the departmental budgets.
What is a rolling budget?
A budget that covers the next quarter in depth and the following three quarters in less depth.
What is an incremental budget?
A method of budgeting that takes last years budget and adjusts it for any changes in activity and inflation.
What is zero based budgeting?
A method of budgeting in which all items of expenditure must be fully justified before including in the budget.
What is programme based budgeting?
A method of budgeting that allocates funds to programmes rather than cost centres. Most suitable for charities.
What is activity based budgeting?
Setting a budget upon activity based costing principles.
What is top down budgeting?
A budgeting system in which the budget is set and imposed by senior management.
