Help
Options
Didn't know it?
click below
click below
Knew it?
click below
click below
Don't Know
Remaining cards (0)
Know
retry
shuffle
restart
0:00
Embed Code - If you would like this activity on your web page, copy the script below and paste it into your web page.
Normal Size Small Size show me how
Normal Size Small Size show me how
ACC 315 Chapter 6
Master Budget and Responsibility Accounting
| Term | Definition |
|---|---|
| Budget | Quantitative expression for a set time period of a plan of action and an aid to coordinating and implementing that plan |
| Major Features of Budget (2) | The budget cycle Coordinates all the financial projections from the organization's individual budgets in a single organization-wide set of budget for a set time period |
| Advantages of budgets (4) | -Compels planning including implementation -Provides Performance Criteria -Motivates managers and other employees -Provides a framework for judging performance and facilitating learning |
| Advantages of budgets (Promoting communication and coordination with the organization) Coordination | Meshing and Balancing all aspects of production or service and all departments in a company in the best way for the company to meet its goal |
| Advantages of budgets (Promoting communication and coordination with the organization) Coordination and forces what? | Forces executives to think of relationships among individual departments within the company |
| Advantages of budgets (Promoting communication and coordination with the organization) Communication | Making sure those goals are understood by all employees |
| Types of budget (Time lengths) | Strategic, long term, short term, (operating) budgets |
| Types of Budgets (Time Coverage) (Product Life Cycle, One Year, Rolling Budgets) Rolling Budget | Continuous budget is a budget that is always available for a specified future period |
| Pro forma statements | budgeted financial statements |
| Targeting | Budgeting |
| Profit Plan | Budget |
| The Master Budget expresses | management's operating and financial plans for a specified period (usually a fiscal year), and it includes a set of budgeted financial statements |
| The Master Budget evolves | from both operating and financing decisions made by managers |
| The master budget: Operating decisions | Deal with how to best use the limited resources of an organization |
| The master budget: Financing decisions | Deal with how to obtain the funds to acquire those resources |
| Steps in preparing the operating budget | Sales (Revenue) Budget: Units of product to be sold Production budget (Units to be produced: Sales +Target Ending FGI - Beginning FGI) Direct Material Budget (Usage and Purchases) -Usage (Cover Production) -Purchases (Production needs + Target Endi |
| Steps in preparing the financial budget | -Capital Budget -Cash Budget -Budgeted balance sheet -Budgeted statement of cash flows |
| Computer Based Financial Planning Models: Master Budget is basis for | sensitivity (what-if) analysis- an integral component of the financial planning process |
| Computer based planning models have facilitated the use of | sensitivity analysis |
| Enterprise Resource Planning (ERP) systems | Perform calculations for these planning models |
| Enterprise Resource Planning (ERP) simplify | budgeting and reduce the computational burden and time required to prepare budgets and store vast quantities of info |
| Kaizen Budgeting | Budgeting approach that projects costs based on future improvements rather than current practices and methods |
| Activity based budgeting | focuses on the costs of activities necessary to product and sell products and services |
| Four Key Steps in Activity based budgeting: | -Determine the budgeted costs of performing each unit of activity at each activity area -Determine the demand for each individual activity based on budgeted production, net product development, and so on -Compute the costs of performing each activity |
Created by:
AEA76013
Popular Accounting sets