Chapter 8 Managerial Accounting

A detailed document that identifies resources and expenditures that will be required over a limited time (typically a year) is a(n) ______.

budget

Company objectives are translated into financial terms in a(n)

budget

When a manager creates a budget that understates expected revenues or overstates expected expenses, _________ ________ occurs

budgetary slack

Budgets ______.

communicate management's plan throughout the organization

Another budget period is automatically added to the budget as one period passes when using a(n) ______ or rolling budget

continuous

Short-term objectives ______.

need to be achieved in one year or less are an important component of long-term objectives

Employees throughout the organization have input into the budget-setting process when ________ budgeting is used

participate

Setting goals and objectives for the future is done during the ______ phase

planning

Budgets are used for two distinct purposes: ______ and ______. The first of these purposes relates to developing goals and preparing various budgets, while the second involves comparing actual results to the budget.

planning controlling

Budgeting is an important part of the ______ and ______ cycle

planning control

Developing goals for the budget is part of _______, whereas ________- involves determining if goals have been followed

planning controlling

Advantages of budgeting include ______.

providing lead time to solve potential problems providing benchmarks for evaluating performance forcing managers to think about and plan for the future promoting cooperation and coordination among different areas within the organization

Sometimes budgetary ________ can be beneficial as a way to hedge against uncertainty or future events than cannot be anticipated.

slack

Tactics are ______.

specific actions or mechanisms used to achieve an objective

Planning starts with managers' ______.

strategic plan

The starting point of the planning process is management's _________ ________or vision for the organization.

strategic plan

Specific actions or mechanisms managers use to achieve objectives are called ________

tactics

Budgets that are most likely to motivate employees ______.

are tight but attainable

True or false: Controlling involves developing goals and preparing various budgets to achieve those goals.

false

True or false: The same budget that is used for planning should always be used for performance evaluation.

false

True or false: Using a participative approach to budgeting is less likely to motivate employees than using a top-down approach.

false

Managers must try to find the "just-right" level of difficulty in setting budgetary goals so they ______.

have motivating effects on employee behavior

Managers put plans into action as part of ______.

implementing

Long-term objectives are goals ______.

managers want to achieve in 5 to 10 years

Budgetary slack occurs when a manager submits a budget that is ______.

too easy to attain

When an organization uses a top-down approach to budgeting, ______.

top management sets the budget the budget is imposed on lower levels of the organization

When management sets the budget and imposes it on employees throughout the organization, a __________-_________ approach is being followed

top-down