ACC 406 Chapter 9: Chapter 9 - Budgetin, Production, Cash and Master Budget

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amethystgoat54

7 Mar 2012

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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.

Related Questions

Please identify at least three roles that budgeting plays inhelping managers control and monitor a business. What is thebenefit of continuous budgeting? Please identify three usual timehorizons for short-term planning and budgets. Why should eachdepartment participate in preparing its own budget? What limits theusefulness to managers of fixed budget performance reports? Pleaseidentify the main purpose of a flexible budget for managers. Whattype of analysis does a flexible budget performance report helpmanagement perform?

1.If making 10 customized holiday cards uses $20 in materials, $20 in hourly wages and $10 in desk rental space, what is the average cost per unit (card)?

$50

$40

$4

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2.When the cards in the above problem are sold, the cost per unit (card) is recorded as

Inventory

Cost of goods sold

Work in progress

Selling expenses
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3.Strategic planning focuses on

		short-range decisions
		intermediate-range policies
		sales targets
		long-range decisions --------------------------------

4.A plan that formalizes, in financial terms, the overall goals and objectives of a company is called a

capital budget

master budget

participative budget

strategic analysis

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5.The operational budgeting process in a firm normally begins with

A bank statement of its cash holdings

An analysis of its days in receivables ratio

Preparation of the sales budget for the period

Drawing on its line of credit

6.Financials statements that are prepared as a forecast based on planning and budgeting in a firm are known as

		Trial balances
		Ledgers
		Pro Formas
		IRS Returns

cyansheep612

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 - Budgetin, Production, Cash and Master Budget

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