Preparing Budgets Flashcards
What is a budget?
A financial plan for an organisation, prepared before the period starts.
What is a key budget factor?
The main factor (internal or external) that determines the planned activity level of the organisation.
What is the budget cycle?
The stages of preparation, approval, implementation, evaluation.
What is an operating budget?
A budget that covers operations over the short to medium term.
What is a capital budget?
A budget used for capital expenditure.
What is a fixed budget?
A budget used on one assumed level of output.
What is a flexed budget?
A budget that is adjusted to correspond with the actual levels of output.
What is incremental budgeting?
Preparing a budget by basing it on the budget for the previous period with adjustments for inflation and known changes.
What is zero based budgeting?
Preparing a budget without reference to the previous period, by analysing the costs and benefits of a series of decision packages.
What is priority based budgeting?
Ranking outcomes into levels of priority as a means of budgeting only for those with the highest priorities.
What is activity based budgeting?
Using the techniques of activity based costing to prepare budgets based on activities and their cost drivers.
What is a production budget?
A budget that plans how much should be produced in a particular period, to allow for anticipated sales, inventory movements of finished goods, and rejections due to poor quality.
What is a labour utilisation budget?
A budget that details the labour input required to meet the needs of the production budget.
What is a materials usage budget?
A budget that plans the amount of materials that is required to satisfy the production budget, after allowing for wastage during production.
What is a materials purchases budget?
A budget that plans for the level of purchases needed to meet the demands of the materials utilisation budget, as well as allowing for wastage before production and changing inventory levels.
What is a plant utilisation budget?
A budget that shows the extent to which owned or rented machinery will be utilised by production.
What is a budget committee?
A committee charged with the responsibility of setting and monitoring the budget, including senior representatives from all parts of the organisation.
What is a budget manual?
A document containing information about how an organisation’s policy on budgeting is implemented.
What is a strategic budget?
A long-term budget produced in outline only.
What is an operational budget?
A short-term budget produced in detail.
What is a capital expenditure budget?
A budget detailing approved expenditure on assets that will benefit the organisation for more than one accounting period.
What is a budgeted operating statement?
A budget based on the statement of profit or loss, showing the detail making up budgeted operating profit.
What is a cash budget?
A budget showing planned cash flows over the budget period.
What is a budget holder?
The manager responsible for a specific budget and the actual performance that is measured against that budget.
What is responsibility accounting?
Management accounting based on departments, activities or functions, each of which is the area of responsibility of an individual.
