CH 7 Flashcards
Bottom up budgeting
A process by which lower level employees actively participate in setting budgets
Budget
A plan for using limited resources
Cash budget
A budget that focuses on the inflow and out flow of cash
Centralized Decision making
An organizational setting where a few top managers make decisions
Cost center
Organizational unti that has control over and is accountable for cost incrred in offering products or services
Decentralized decision making
An organizational setting where decision-making authority is dispersed throughout the firm
Financial budgets
budgets quantifying the outcomes of operating budgets in summary financial statements
Investment Center
Organizational unit that has control over and is accountable for rev, costs, and long term investment decisions.
Master budget
Comprehensive set of operating and financial budgets
Operating budgets
Budgets reflecting the collective expression of numerous short term decisions that conform to the direction set by long term plans
Profit center
Organizational unit that has control over and is accountable for both revenues and costs
Responsibility accounting
Set of concepts pertaining to decision rights and performance evaluation in decentralized organizations.
Responsibility center
An organizational submit
Top down budget
A process by which top management sets the budget
