Chapter 6.4 The Budgeting Process Flashcards
What is the primary purpose of the budget committee?
To oversee and guide the budgeting process, ensuring alignment with strategic goals and financial capabilities.
Who typically comprises the budget committee?
Key stakeholders including top management, department heads, financial experts, and sometimes external consultants.
What role does top management play in the budget committee?
Provides strategic vision.
What insight do department heads provide to the budget committee?
Department-specific needs.
What knowledge do financial experts bring to the budget committee?
Knowledge of financial constraints and opportunities.
What can external consultants contribute to the budget committee?
An objective viewpoint and knowledge of industry benchmarks.
What does the budget committee define for the budgeting process?
Overall objectives, expectations, and timelines.
What is a common budget period that covers a fiscal year?
Annual budget.
What is the advantage of using a quarterly budget?
More frequent opportunities for performance assessment and adjustment.
What is a rolling budget?
A budget that incorporates a new month or quarter as the current one concludes.
What does a zero-based budget require from departments?
To justify all expenses anew.
What are some factors that influence the choice of budget period?
- Industry dynamics
- Organisational goals
- Need for flexibility
What is the purpose of developing budget guidelines?
To provide a framework and principles that guide budget preparations.
What do budget guidelines help ensure in the budgeting process?
Consistency, alignment with strategic objectives, and transparency.
Fill in the blank: The budget period specifies the time frame for which the budget will be _______.
[planned and executed]
