ADM 2341 Lecture 9: Managerial accounting ch 9
9 May 2016
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Document Summary
Detailed quantitative plan for acquiring and using financial and other resources over a specified forthcoming time period. Act of preparing a budget is called budgeting. Use of budgets to control org activity is budgetary control. Feed back loop: compare actual results with planned results. Planning: involves developing objectives and preparing various budgets to achieve theses objectives. Control: involves the steps taken by management that attempt to ensure the objectives are attained. Managers should be held responsible for those items, and only those items, that the manager can actually control to a significant extent. Annual operating budget may be divided into quarterly or monthly budgets. Budget is prepared with the full cooperation and participation of managers at all levels. Should be reviewed by higher levels of management to prevent budgetary slack. Not relied on exclusively by most companies, in that top managers usually initiate budgets process by issuing broad guidelines in terms of overall profits or sales.
