ACCT 311 Chapter 8: Master Budgeting

An essential management tool that communicates management's plan throughout the organization, allocates resources, and coordinates activities is the ___________________

master budget

The amount of goods for resale to be purchased from suppliers during the period is shown on the ______ ______ budget.

merchandise purchases

What is subtracted from total budgeted selling and administrative expenses to determine the cash disbursements for selling and administrative expenses?

non-cash expenses

Developing goals and preparing various budgets to achieve these goals is part of the ____________ process

planning

budgets are used for:

planning and control

Cash Budget includes

receipts disbursements cash excess/deficiency financing

Both the production and selling and administrative expense budgets are prepared using information directly from the ____ budget:

sales

What budgets are directly based on information from the sales budget?

selling and administrative expense budget production budget

What are the six advantages of budgeting?

1. communicate management's plans 2. force managers to plan 3. allocating resources 4. uncover bottlenecks before they occur 5. coordinate and integrate the organization 6. define goals which serve as benchmarks

What are three advantages of self-imposed budgets?

1. individuals at all levels are recognized as members 2. estimates prepared by front-line management 3. motivation is generally higher when individuals participate in setting their own goals than when goals are imposed from above

What are two limitations of self-imposed budgets?

1. poor broad strategic perspective from low-level managers 2. creation of a budget with budgetary slack

Responsibility Accounting

A system of accountability in which managers are held responsible for those items of revenue and cost—and only those items—over which they can exert significant control. The managers are held responsible for differences between budgeted and actual results.

continuous budget (perpetual budget)

a 12-month budget that rolls forward one month as the current month is completed

Self-imposed budget (participative budget)

a budget that is prepared with the full cooperation and participation of managers at all levels

budget

a detailed plan for the future that is usually expressed in formal quantitative terms

cash budget

a detailed plan showing how cash resources will be acquired and used over a specific time period

Final Schedule of master budget is the ________________________

budgeted balance sheet

master budget

consists of a number of separate but interdependent budgets that formally lay out the company's sales, production, and financial goals; culminates in a cash budget, budgeted income statement, and budgeted balance sheet

planning

developing goals and preparing budgets to achieve those goals

Sales Budget

first step in budgeting process a detailed schedule showing expected sales expressed in both dollars and units

control

gathering feedback to ensure that the plan is being properly executed or modified as needed