ACC 406 Chapter 9: Chapter 9.txt

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6 Mar 2012

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Budget: are financial plans for the future and are a key component of planning. Strategic plan: identifies strategies for future activities and operations, gene rally covering at least five years. Advantages of budgeting: it forces managers to plan, it provides information that can be used to improve decision making, it provides a standard for performance evaluation, it improves communication and coordination. Is the comprehensive financial plan for the organization as a whole. 1 year period, corresponding to the fiscal year. Continous budget: is a moving 12-month budget hat the company always has a 12-month plan on hand. An additional month in the future is added so t. Budget commitee: reviews the budget, provides policy guidelines and budgetary go als, resolves differences that arise as budgets are prepared, approved budget. Operating budgets: describe the income-generating activities of a firm: sales, p roduction, finished goods. Financial budgets: detail the inflows and outflows of cash and the overall finan cial position.

Related Questions

Budgeting supports the planning process by encouraging all ofthe following activities except:

A. Requiring all organizational units to establish their goals forthe

upcoming period

B. Increasing the motivation of managers and employees by

providing agreed-upon expectations

C. Coordinating operations between departments during theperiod

D. Improving overall decision making by considering all

viewpoints, options and costreduction possibilities.

24. The comprehensive budget plan linking all the individualbudgets related tosales, cost of goods sold, operating expenses,projects, capital expenditures and cash is known asthe:

A. Cash budget

B. Capitalexpenditures budget

C. Continuousbudget

D. Masterbudget

25. A variant of fiscal-year budgeting whereby a twelve-monthprojection into the future is maintained at all times istermed:

A. Flexible budgeting

B. Continuous budgeting

C. Zero-based budgeting

D. Master budgeting

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About ProfitPlanning and Activity-Based Budgeting

1. Explain how a budget facilitates communication andcoordination.

2. Use an example to explain how a budget could be usedto allocate resources in a university

Question (c) ShortQuestions

1. What are the similarities anddifferences of management accounting and financial accounting?

2. What management functions influencethe role of the finance department in an organization? How do thesefunctions affect the activities of the finance department?

3. While management relies heavily onfinancial data, these cannot be considered as a complete answer tomanagement problems. Why?

4. Does the controller exercisecontrol over other departments in an organization? Explain youranswer.

5. Compare and contrast the role andfunctions of the controller and treasurer.

6. Compare and contrast the role andfunctions of the internal auditor and external auditor.

7. Compare and contrast profitplanning and budgeting.

8. Explain the advantages a companymay derive from budgeting.

9. Explain the limitations ofbudgeting.

10. Explain the possible assumptionsone will consider in budget preparation.

11. Who usually compose a budgetcommittee?

12. Compare and contrast incremental budgeting, zero-basedbudgeting, and activity-based budgeting.

13. What behavioral problems are associated with setting abudget too tightly and too loosely?

ACC 406 Chapter 9: Chapter 9.txt

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