ACCTG 102 Lecture 14: ACCTG_102_-_LE_14
Document Summary
Budgeting basics; one of managements major responsibilities is planning- setting objectives. A successful company sets forth long term and short term plans. A budget is a formal written summary of managements plans expressed in financial terms for a specified time period. Once adopted = important base for evaluating performance. Budgeting and accounting: accounting info makes major contribution to budgeting. Use historical data on revenue, costs, expenses to formulate future budget. Accounting usually has responsibility for taking management goals and expressing them in financial terms. Accounting also periodically prepares reports that compare budget to actual. The budget itself and administration are entirely management"s responsibility. Definite objective for evaluating performance, early warning system for potential problems. Cash budget may show need for outside financing before cash shortage. Coordination of activities within business by correlating goals, each segment within overall. Management awareness of entity"s overall operation and the impact of external factors. Essentials of effective budgeting: sound organizational structure, authority and responsibility.
