Week 7 Flashcards
1
Q
Rolling budget meaning
A
Updateable budget when some period ends
2
Q
Functions of budgeting
A
- Plan and coordinate
- Motivate and measure performance
- Communicate goals and strategy
3
Q
Operating planning meaning
A
How to use scarce resources
4
Q
Financial planning meaning
A
How to get funds to acquire resources
5
Q
Top down approach vs bottom-up in budgeting
A
Top-down - central decision by ceo or headquarters
Bottom-up - lower managers make suggestions on what budget should be
6
Q
Adverse selection
A
Person already has more information on which he might act upon before signing a contract
7
Q
Moral hazard
A
Actions that were taken after signing a contract to manipulate outcomes in agent problem
