Budgeting Flashcards
Budget
is a mechanism for setting goals and objectives, for allocating the resources to achieve those objectives. Using this statement, a budget is just a way to allocate resources for accomplishing a certain goals and objectives of an organization.
Budget Cycle
Preparation, approval, execution, evaluation
Performance Based Budgeting
a budget for the cost center of an organization. Rather than focusing on the objects of spending, such as salaries, supplies or equipment, a performance budget is primarily concerned with the activities of an organizational unit, such as providing direct care, indirect care, or working on quality of care improvements. Specific objectives for each activity are stated in a performance budget, and specific financial resources are associated with each activity. One of the arguments in favor of performance based budgeting is that can improve the effectiveness of a department or organization and improve the overall quality of budget deliberations and decision- making
Line Item Budgeting
Line item budgeting makes it easy to compare budgets from previous years when drafting the new fiscal year budget. This form of budgeting also makes it easy to justify expenditures. Each expenditure has its own line with the dollar amount allocated to that activity.
User Charges
are a way for government and public entities to obtain revenues. It is based on the idea that citizens should pay for their usage of public goods and services. Voluntary and Involuntary
Rational Decision Making Model
The first step involves the organization or the agency to rank their goals according to
priority. Secondly, the organization or agency identifies all possible alternatives. The
cost of each alternative are weighed and compared with anticipated benefits. With this
information, decisions are made as to which alternative is relevant to satisfy the needs or
desires. Therefore, the alternative with the highest payoff and/or least cost is considered.
