ACC 406 Chapter 9: Chapter 9 - Budgetin, Production, Cash and Master Budget
Document Summary
All business should prepare budgets, all large business do; single-owner business, partnerships, and corporations. Even small business; professional corporations like lawyers, dentists and doctors. All can benefit from planning and control provided by budgets. Planning is looking ahead to see what actions should be taken to realize particular goals. Control is looking backward, determining what actually happened, and comparing it with the previously planned outcomes. Budgets are financial plans for the future and are a key component of planning, they identify objectives and the actions needed to achieve them. Before a budget is prepared, an organization should prepare a strategic plan. Strategic plan identifies strategies for future activities and operations, generally covering at least 5years. The basis of budget is long and short term goals. It encourages managers to develop an overall direction for the organization, foresee problems, and develop future policies. Provides information that can be used to improve decision making.