ADMS 2510 Lecture Notes - Income Statement
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31 Mar 2013
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ADMS 2510 Full Course Notes
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Master budget: a summary of a company"s plans in which specific targets are set for sales, production, distribution, and financing activities; it generally culminates in a cash budget, a budgeted income statement, and a budgeted balance sheet. Budgets serve as both a planning tool and a control tool in organizations. Planning involves developing objectives and preparing various budgets to achieve these objectives. Control involves the steps taken by management to increase the likelihood that the objectives developed at the planning stage are attained and to ensure that all parts of the organization function in a manner consistent with organizational policies. Bottleneck: a machine, activity, or process that limits total output because it is operating at capacity. Responsibility accounting: a system of accountability in which managers are held responsible for those items of revenue and cost over which they can exert significant influence-and only those items. Managers are held responsible for differences between budgeted and actual results.