Master Budgeting

What is a Perpetual Budget?

12 Month budget that continuously moves forward

What is a Continuous Budget or Rolling Budget?

A 12 month budget that rolls forwards one month (or quarter) as the month (or quarter) us completed

What is a budget?

A detailed quantitative plan for acquiring and using financial and other resources over a specified forthcoming period of time

What period of time do budgets ordinarily cover?

A year

Budgeting is the common accounting tool companies' use for planning and controlling. Budgets...

Budgets serves as the financial expression of management's plans for the upcoming period

Why do companies create budgets? (Planning Persepcitive)

Define goals and objectives Think about and plan for the future Means of allocating resources Uncover potential bottle necks Coordinate activities Communicate plans

What is the first step in the budgeting process?

Estimate the Sales Volume Merchandising and Manufacturing -Units Services: Number of projects

Why do companies create budgets? (Control Perspective)

From a control perspective, companies compare their actual budgets with the actual results to: Improve the efficiency and effectiveness of operations Evaluate and reward employees

A manufacturing company would have a need for which of the following budgets? a. Sales Budget b. Production Budget c. Cash Budget d. Merchandise Purchase budget

Merchandise purchase budget

What do Operating Budgets usually cover?

One year period that corresponds to the company's fiscal year Many companies divide their budget into four annual quarters

Two Key Purposes of Budgets:

Planning: involves developing objective and preparing various budgets to achieve those objectives Control: Involves the steps taken by management to increase the likelihood that the objectives set while planning are attained and that all parts of the organization are working together toward that goal

Which of the operating budgets is prepared first? a. Production Budget b. Sales Budget c. Cash received budget d. Cash payments budget

b Sales Budget