Midterm Exam Flashcards
(38 cards)
“The budget should be balanced, the treasury should be revealed, public debt should be reduced, the arrogance of officialdom should be tempered and controlled, and the assistance to foreign lands should be curtailed lest Rome become bankrupt.”
Cicero
A plan expressed in quantitative terms on how to acquire, and use the resources of an entity during a certain future period of time
Budget
The process of creating a formal plan and translating goes into a quantitative format
Budgeting
Also, called as management or executive committee, is primarily responsible in developing and institutionalizing budgetary systems and processes. It is usually composed of sales manager, production manager, the chief engineer, and the contractor.
Budget committee
A detailed set of information and guidelines about the budgeting processes
Budget manual
Budget manual includes:
Statements of the budgetary purpose and desired results
A listing of specific budgetary activities to be performed
Calendar of scheduled budgetary activities
Sample budgetary forms
Original, revised and approved budgets
The length of time for which a budget is to be prepared and implemented
Budget period
It represents the overall plan of the organization for a given budget. It consist of all the individual budgets for each segment of the organization, aggregated or consolidated into one overall budget for the entire firm.
Master budget
Master budget is composed of:
Operating budget
Financial budget
Special budget
The budgeted income statement for a certain budget period
Operating budget
The budgeted balance sheet as of the end of a certain period
Financial budget
It includes performance and capital budgets
Special budget
The activities to be incurred are to be prioritized based on its order of relevance in line with a defined goal in the coming period without regard to past experience or present condition.
Zero based budgeting
This budgetary approach emphasizes the decentralization of budgetary decision making. It pleases local managers and other staff at the center of the budget preparation process, making them responsible for both the preparation and the maintenance of the budget.
Site-based budgeting
A time frame is maintained, and when a segment in the budgeted timeframe expire and is dropped, a new segment is to be added to maintain the same timeframe
Continuous (rolling) budgeting
It is done over the entire lifespan of a product starting from its period of conception, to infancy, to growth, expansion up to maturity.
Life-cycle budgeting
Budgets are developed through joint decision making by top management and operating personnel
Participatory budgeting
Budgets are prepared by top management with little or no input from operating personnel
Imposed budgeting
Costs and expenses are not segregated to fixed and variable components in the budgeted costs, without the adjustments to actual capacity, serves as the basis in evaluating actual performance
Static (fixed) budgeting
Prepared for a different level of activity, costs and expenses are segregated to fixed and variable components giving way to the determination of estimated costs based on actual capacity
Flexible budgeting
Expressed in units of materials, number of employees, or number of men hours, or service units, rather than in pesos
Physical budgeting
Identifying responsibility centers where revenues and costs are controlled by a responsible officer
Responsibility budgeting
It is the practice of linking the allocation of resources to the production outcomes. The objective is to allocate government resources to those service providers or programs that use the most effectively.
Outcome-focused budgeting
It is referred to as the historical approach because administrators and chief executives often based their expenditures requests on historical expenditures and revenue data
Line-item budgeting