Chapter 9 - KNOWLEDGE Flashcards
What is a budget?
is a detailed quantitative plan for acquiring and using financial and other resources over a specified forthcoming time period
What is planning?
developing objectives and preparing various budgets to achieve these objectives.
What is controlling?
involves the steps taken by management that attempt to ensure the objectives are attained.
Advantages of Budgeting?
Define goal and objectives, Coordinate activities, Means of allocating resources
Who is held accountable for a budget?
Managers are held responsible for a budget that they have control over
What is a continuous budget?
is a 12-month budget that rolls forward one month (or quarter) as the current month (or quarter) is completed.
What is a participative budget?
A budget is prepared with the full cooperation and participation of managers at all levels
1st Advantage of a Participative Budget?
Everyone is viewed as a member of the team who is valued by top management
2nd Advantage of a Participative Budget?
Budget estimates prepared by front-line managers are often more accurate
3rd Advantage of a Participative Budget?
Motivation is generally higher when individuals participate in setting their own goals
4th Advantage of a Participative Budget?
Amanagerwhoisnotabletomeetabudgetimposed from above can claim that it was unrealistic
What is a standing committee responsible for?
Overall policy matters relating to the budget, coordinating the preparation of the budget, resolving dispute and approval
1st important factor of budgeting?
Top management must be enthusiastic and committed to the budget process.
2nd important factor of budgeting?
Top management must not use the budget to pressure employees or blame them when something goes wrong.
3rd important factor of budgeting?
Highly achievable budget targets are usually preferred when managers are rewarded based on meeting budget targets
What is zero-based budgeting?
requires managers to justify all budgeted expenditures, not just changes in the budget from the prior year.
What is Direct Materials Budget?
It details the raw materials that must be purchased to fulfill the production budget and to provide for adequate inventories.
What is Direct Labour Budget?
The direct labour budget is a detailed plan showing labour requirements over some specific time period.
What is the Manufacturing Overhead Budget?
The manufacturing overhead budget provides a schedule of all costs of production other than direct materials and direct labour.
What is The Ending Finished Goods Inventory Budget?
After computing unit product costs, the carrying cost of the unsold units is computed on the ending finished goods inventory budget.
What is the Cash Budget?
The cash budget pulls together much of the data developed in the preceding steps and displays it in four major sections: receipts, disbursements, cash excess or deficiency, and financing.
1st Section of the Cash Budget?
Cash receipts listing all cash inflows excluding borrowing;
2nd Section of the Cash Budget?
Cash disbursements listing all payments excluding repayments of principal and interest
3rd Section of the Cash Budget?
Cash excess or deficiency;
