Chapter 7 Flashcards
A financial plan managers use to coordinate a business’ activities with its goals and strategies.
budgets
The practice of comparing a company with its prior performance or with best practices from other companies.
Benchmarking
A budgeting process where those individuals who are directly impacted by a budget are involved
participative budget
occurs when managers intentionally understate expected revenues or overstate expected expenses.
budgetary slack
A budget technique that requires managers to justify all revenue and expenses for each new period
zero-based budget
A long-term financial plan used of coordinate activities needed to achieve the long-term goals of the company
strategic budget
a short-term financial plan used to coordinate the activities needed to achieve the short-term goals
operational budget
Involves continuously adding one additional month to the budget as each month goes by
Continuous budget
A budget prepared for only one level of sales volume
static budget
A budget prepared for various levels of sales volume
Flexible budget
Set of budgeted financial statements and supporting schedules for the entire organization.
Master budget
What are the three types of budgets included in the master budget
Operating
Financial
Capital expenditure
Set of budgets that projects sales revenue, COGS, and SG&A, all of which feed into the cash budget
operating budget
This budget presents the company’s plan for purchasing property, plant, equipment, and other long term assets.
Capital expenditures budget
This budget includes cash budget and the budgeted financial statements.
Financial budget
