AFM102 Lecture Notes - Lecture 9: Budget, Income Statement

• School: University of Waterloo
• Department: Accounting & Financial Management
• Course: AFM102
• Professor: Catherine Wong

Document Summary

Budgeting detailed plan for the future expressed in quantitative terms. Master budget su(cid:373)(cid:373)arizes a (cid:272)o(cid:373)pa(cid:374)y"s pla(cid:374)s, sets targets for sales, produ(cid:272)tio(cid:374), distri(cid:271)utio(cid:374) etc. Budgets role is to plan and control. Plan by developing objectives and preparing various budgets to achieve these objectives. Communicate management plans throughout the organization, better understanding of goals and objectives. Force managers to think and plan for the future. Can uncover bottle necks before they occur, by identifying the demands that will be placed on key activities and processes. Define goals and objectives that can serve as benchmarks for evaluating performance. Responsibility accounting managers should be held responsible for items and only those items that they can influence to a significant extent. It personalizes accounting information by holding individuals responsible for revenues and costs. This is done so each person has a responsibility and the costs do not grow out of control. Operations budget cover a one year period.