ACCT 2230 Chapter Notes - Chapter 9: Finished Good, Budget

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17 Dec 2011

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Budget: a detailed plan for the acquisition & use of financial & other resources over a specified time period. Master budget: a summary of the company"s plans that sets specific targets for sales production, distribution, & financing activities. Budgets serve as a planning & control tool in organizations. Planning involves developing objectives & preparing various budgets to achieve objectives. Control involves the steps taken by management to increase likelihood that developed objectives will be achieved. Budgeting allows time to analyze the situation on paper before consuming the resources necessary. Advantages of budgeting: provide means of communication of managements plans throughout company, force managers to think about plan for the future. 3: uncovers potential bottlenecks (machine, process etc. that limits total output b/c it is operating at. Provides means of allocating resources to those parts where they will be use most effectively capacity) before they occur. Define goals & objectives and serve as benchmarks for evaluating performance.

Related Questions

Budgeting and long-range planning are both important aids to management in achieving a company's goals and objectives. Briefly distinguish between budgeting and long-range planning, and indicate how they help managers perform their functions.

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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?

Why are budgets useful in the planning process?

A) They enable the budget committee to earn their paycheck

B) They provide management with information about the company's past performance

C) They help communicate goals and provide a basis for if it meets its objectives

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ACCT 2230 Chapter Notes - Chapter 9: Finished Good, Budget

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