ACCTG 102 Lecture Notes - Lecture 8: Finished Good
Document Summary
Budgets help business owners and managers to plan ahead and, later, exercise control by comparing what actually happened to what was expected according to the budget. Budgets formalize manager"s expectations regarding sales, prices, and costs. Planning and control are tied up together. Planning: looking ahead to see what actions should be taken to realize particular goals. Control: looking backward, determining what actually happened, and comparing it with the previously planned outcomes. Identify objectives and actions needed to achieve them. Before a budget is prepared, a strategic plan should be developed. Identifies strategies for future activities and operations. Comprehensive financial plan for the organization as a whole. Typically, the master budget is for one-year period, corresponding to the fiscal year of the company. Yearly budgets are broken down into quarterly and monthly budgets. Resolves differences that arise as the budget is prepared. Monitors actual performance as the year unfolds. Operational budgets: describe the income-generating activities of a firm.
