ch14 Flashcards
Planning activities associated with long-term decisions include defining the business’s scope, determining which products to develop, deciding whether to discontinue a business segment and determining which market niche would be most profitable.
strategic planning
Financial planning activities that cover the intermediate range of time such as whether to buy or lease equipment, whether to purchase a particular investment, or whether to increase operating expenses to stimulate sales.
capital budgeting
Short-term planning activities such as the development and implementation of the master budget.
operations budgeting
Continuous budgeting activity typically covers a 12-month time span by replacing the current month’s budget at the end of each month with a new budget; it keeps management constantly involved in the budget process so that changing conditions are incorporated on timely bases.
a perpetual (continuous) budgeting
Budget technique that allows subordinates to participate with upper-level managers in setting budget objectives, thereby encouraging cooperation and support in the attainment of the company’s goals.
participative budgeting
Composition of the numerous separate but interdependent departmental budgets that cover a wide range of operating and financial factors such as sales, production, manufacturing expenses, and administrative expenses.
master budget
Budgets prepared by different departments within a company that will become a part of the company’s master budget; typically include a sales budget, an inventory purchases budget, a selling and administrative budget, and a cash budget.
operating budgets
Budgeted financial statements are prepared from the information in the master budget.
pro forma financial statements
A budget that focuses on cash receipts and payments that are expected to occur in the future.
cash budget
