MGAB03H3 Chapter Notes - Chapter 10: Financial Statement, Financial Institution, Variable Cost

51 views6 pages
Published on 24 Nov 2011
School
UTSC
Department
Financial Accounting
Course
MGAB03H3
Professor
1-Tammy
MGTB03 Chapter 10 Notes
*Budgeting
-A budget is a formalized financial plan for operations of an organization for a specified future
period.
-It helps the organization coordinate the activities needed to carry out the plan.
-it reflects management's forecast of the financial effects of an organization's plans for one or more
future time periods
-It also provides a mechanism for defining the responsibilities and financial decision-making
authority, or decision rights, of individual managers
*Budget Objectives
*Budget Cycles
-A budget cycle is a series of steps that organizations follow to develop and use budgets
-Managers typically begin the process by revisiting and possibly revising the organizational vision
and core competenciesreconsider long-term strategies in light of the vision and core
competenciesthe current period's operating plans are developed
*Master Budget
-A master budget is a comprehensive plan for an upcoming financial period, usually a year
-It reflects an organization's future operating and financing decisions and are often summarized in a
Unlock document

This preview shows pages 1-2 of the document.
Unlock all 6 pages and 3 million more documents.

Already have an account? Log in
2-Tammy
set of budgeted financial statements
-These statements are forecasts of the future income statement, balance sheet, and cash flows,
given an organization's sales forecasts and expenditure plans for the next period
-Master Budget=Operating Budget+Financial Budget
*The development of a master budget in a manufacturing organization
-Operating Budget: management's plan for revenues, production, and operating costs
-Financial Budget: management's plans for capital expenditures, long-term financing, and cash flows,
leading to a budgeted balance sheet and budgeted statement of cash flows
-The cash budget is part of the financial budgets
-A cash budget reflects the effects of management's plans on cash and summarizes the information
that accountants gather about the expected amounts and timing of cash receipts and
disbursements.
- The capital budget reflects long-term investment.
*Developing a Master Budget
-The master budget is developed using a set of budget assumptions, which are plans and
predictions about next period's operating activities
-Revenues are budgeted assuming a particular forecast of sales volumes and prices or assuming an
estimated percentage change from the prior year.
-Individual costs are budgeted assuming a fixed amount to be spent, as a percentage of revenues, as
a percentage change from the prior year, or on some other basis
-The process of developing a master budget becomes increasingly complex as organizations become
Unlock document

This preview shows pages 1-2 of the document.
Unlock all 6 pages and 3 million more documents.

Already have an account? Log in

Document Summary

A budget is a formalized financial plan for operations of an organization for a specified future period. It helps the organization coordinate the activities needed to carry out the plan. It reflects management"s forecast of the financial effects of an organization"s plans for one or more future time periods. It also provides a mechanism for defining the responsibilities and financial decision-making authority, or decision rights, of individual managers. A budget cycle is a series of steps that organizations follow to develop and use budgets. Managers typically begin the process by revisiting and possibly revising the organizational vision and core competencies reconsider long-term strategies in light of the vision and core competencies the current period"s operating plans are developed . A master budget is a comprehensive plan for an upcoming financial period, usually a year. It reflects an organization"s future operating and financing decisions and are often summarized in a.

Get OneClass Grade+

Unlimited access to all notes and study guides.

YearlyMost Popular
75% OFF
$9.98/m
Monthly
$39.98/m
Single doc
$39.98

or

You will be charged $119.76 upfront and auto renewed at the end of each cycle. You may cancel anytime under Payment Settings. For more information, see our Terms and Privacy.
Payments are encrypted using 256-bit SSL. Powered by Stripe.