Chapter 8 Flashcards
1
Q
detailed quantitative plan for acquiring and using financial and other resources over a specified forthcoming time period
A
budget
2
Q
cover a 1 yr period corresponding to a company’s fiscal yr.
A
operating budget
3
Q
12 month budget that rolls forward one month (or quarter) as the current month (or quarter) is completed
A
continuous budget
4
Q
two purposes budgets are used:
A
planning and control
5
Q
Why do organizations create budgets? (planning perspective)
A
- define goals and objectives
- communicate plans
- coordinate activities
- uncover potential bottlenecks
- think about and plan for the future
- means of allocating resources
6
Q
Why do organizations create budgets? (control perspective)
A
- to evaluate and reward employees
- improve efficiency and effectiveness of operations
7
Q
advantages of self-imposed budgets
A
- shows respect for lower-level manager opinions
- often more accurate than est. prepped by top managers
- motivation is generally higher
- it empowers them to take ownership
8
Q
self imposed budgets should be reviewed by higher levels of management to prevent…
A
budgetary slack
