Managerial Acct Chapter 7

Managerial Acct Chapter 7 - CHAPTER 7 PURPOSE OF BUDGETING:...

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CHAPTER 7 PURPOSE OF BUDGETING: Meaning of budget--- Detailed plan, expressed in quantitative terms that specifies how resources will be acquired and used during a specified period of time. Budget used as an aid in making and coordinating short range plan. Budget used as a device for communicating these plans to the various responsibility people and managers. Budget used as a way of motivating managers to achieve their goals. Budget used for controlling on going activities. Budget used for evaluating the performance of the organization as a whole. Budget used as a mean of educating managers.
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TYPES OF BUDGETS: 1. Operating budget : or they call it Budgeted Financial Statements. this shows planed revenue, expenses and other sources. operating budget shows that estimated revenue and expenses for the year a head. 2. A cash budget : This kind of budget shows expected cash receipts as a result of selling goods or services, and planned cash disbursements to pay the bills incurred by the firm. The following five main sections: Total cash available. Cash disbursements. Cash excess or deficiency. Financing. Cash balance.
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3 - Sales budget : This is projection approved by the budget committee that describes expected sales for each product in units and dollars. 1
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Managerial Acct Chapter 7 - CHAPTER 7 PURPOSE OF BUDGETING:...

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