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Master Budgeting
and
Responsibility Accounting
Budget defined
The quantitative expression of a proposed
plan of action by management for a
specified period,
May include financial and non-financial data
supporting schedules
O Prepare the cash budget
Past performance
+ Anticipated changes
= Current budget
2. Financial Budget
Capital expenditures Cash Balance sheet
Stmt of Cash flows
Budget Steps
O Budgets are prepared in a specific
order
(See 9 steps to operating budget in text)
Additional comments
O Financial-planning software can be
Sensitivity analysis
Responsibility Accounting
O Responsibility Center
2.
3.
4.
opportunities
A basis for performance evaluation
A basis for strategy evaluation
Terms
O Controllability - Degree of a
budgetary constraints by
underestimating
revenues/overestimating expenses
during planning process
Human Behavior
Superiors
O Dominate the budget process
O Hold subordinates accountable when
Subordinates
O Build slack into budgets