ACCT20200 Chapter 8: Section 8.1
Document Summary
Master budget: an essential management tool that: Communicates management"s plans throughout the organization or company. Budget: a detailed plan for the future that is usually expressed in formal quantitative terms. Once the budget is prepared, actual spending is compared to the budget to make sure the plan is being followed: purpose of a budget, planning: Developing goals and preparing various budgets to achieve those goals: control: Holds individuals responsible for revenues and costs. Choosing a budget period: many companies divide their budget year into four quarters. Broken down into months within the quarters: continuous (perpetual) budget: A 12 month budget that rolls forward one month (or quarter) as the current month (or quarter) is completed. One month (or quarter) is added to the end of the budget as each month (or quarter) comes to a close. This approach keeps managers focused at least one year ahead so that they do not become too narrowly focused on short-term results.
