Budgeting Flashcards
Is depreciation a cash mvmt?
No, remove
What is an example of a principal budget factor?
A factor which limits the activities of an undertaking
For a company that does not have any production resource limitations, what is the correct sequence for budget preparation?
Sales budget, finished goods inventory budget, production budget, then materials usage budget
What is true of the master budget?
- will include a budgeted balance sheet and a budgeted income statement prepared on the
accruals basis - Will include a cash budget
What is the formula for production units?
Closing inventory + sales – opening inventory
When preparing a material purchases budget, what determines the quantity to be purchased?
Materials required for production – opening inventory of materials + closing inventory of
materials
What can be inferred from the statement, The quantity of material in the material purchases budget is greater than the quantity of material in
the material usage budget.
Raw materials inventories are budgeted to increase.
How is a month end payables balance calculated?
That month’ s purchases + previous month’s purchases
When must a budget be quantified?
If it is to be useful for planning and control purposes.
What does an organisation’s long term plan provide?
The framework within which an annual budget is set.
What are 2 underlying assumptions of forecasts made using regression analysis?
- The value of one variable can be predicted or estimated from the value of one other variable
- What has happened in the past will provide a reliable guide to the future
What is the coefficient of determination?
r^2
What does the coefficient of determination measure?
The proportion of the total variation in the value of one variable that can be explained by variations in the value of the other variable.
What values must the coefficient determination always fall between?
0 and 1
What values must the correlation coefficient always fall between?
-1 and 1
What is a top-down budgeting process?
Top management prepare a budget with little or no input from operating personnel
What are 2 advantages of bottom-up budgeting?
- Increase operational managers’ commitment to organisational objectives
- Based on information from employees most familiar with day to day activities
What is incremental budgeting?
The budget for each period is based on the current year’s results, modified for changes in activity levels.
What is the high-low method useful for?
Calculating the budgeted cost for the actual activity
What is the reason for seasonally adjusting the data in a time series?
To find the trend
What can help reduce data bias in an AI system?
- Using training data from all areas of the country
- Monitoring performance of the system against real data
Can graphs be manipulated to introduce bias?
Yes
What is the formula for budgeted inventory purchases?
COS + change in inventory
Is a general provision a cash mvmt?
No so 0s or remove
Is the re-evaluation of an asset a cash mvmt?
No so 0s
