Chapter 3: Identifying budget data Flashcards

1
Q

Types of data

Data
Information

A

Data - Simply raw facts, numbers or transactions in the accounting system

Data example - thousands of individual sales invoices that a large company may be sent to customers in the year

Information - data which has been processed in such a way that is meaningful to the person looking at it

Information example - a set of management accounts clearly showing the break-down of monthly sales by product line

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2
Q

Quantitative Data

A

data that is measured with numbers
numerical form

such as how long it takes to produce one unit of production

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3
Q

Qualitative data

A

Cannot be measured in numerical or monetary terms

such as level of quality of our product

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4
Q

Primary Data

A

Data gathered by yourself for a specific purpose

Can be tailored to your individual requirements and the source of the data will be known

Can be expensive and time consuming

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5
Q

Secondary Data

A

Data gathered by someone else

Secondary data can be out of date, incomplete or not specific to your particular needs

Can be less expensive and quicker to obtain than primary data

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6
Q

Sources of data

Internal and external

A

Internal - data collected from within the organisation

Example of internal - inventory records

External - outside the organisation
example - government statistics

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7
Q

Forecasting v budgeting

A

Budgeting - is a plan, where do we want to be?

Forecasting - prediction of what is likely to happen, forecasting is not a goal

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8
Q

Forecasting sales

4 methods

A

Sales experts - using knowledge provided by experienced sales managers within the business who will have a good idea of what sales are going to be

Market research - try to identify what customers are likely to buy in the next period by asking them - questionnaires or interviews

Time Series Analysis - identifying patterns in the data

Linear regression - using historical results to predict the future

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9
Q

Forecasting expenditure

4 Methods

A

Production and purchasing managers - asking knowledgeable managers who are involved in the factory or deal with suppliers

Market research - Talk to suppliers directly to get their thoughts on what they will be charging next year. Alternatively we could pay a market research agency for copies of reports that they have already produced

Time Series Analysis and linear regression

Price indices - using predictions of the likely inflation of costs to help to budget expenditure

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