ACCT 2000 Chapter : Chapter 20 Class Notes
Document Summary
The bottom-to-top approach is called participative budgeting: risk of unreliable budgets greater when they are top-down . Chapter 20 notes: budgetary slack refers to managers using the budget to foster gaming by intentionally underestimating budgeted revenues or overestimating budgeted expenses so that budget goals are easier to meet. Budgeting versus long range planning: three basic differences between budgeting and long range planning, time period involved, emphasis, detail presented, budgeting is short-term usually one year, long range planning at least 5 years. The budgeting process: base budget goals on past performance, collect data from organizational units, begin several months before end of current year, develop budget within the framework of a sales forecast. The master budget: a set of interrelated budgets that constitutes a plan of action for a specified time period, contains two classes of budgets: operating and financial, operating budgets: Individual budgets that result in the preparation of the budgeted income statement establish goals for sales and production personnel.
