chapter8 - Management Accounting | 137 Comprehensive...

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
Management Accounting | 137 Comprehensive Business Budgeting Goals and Objectives Proft planning, commonly called master budgeting or comprehensive business budgeting, is one oF the more important techniques or tools in the management accountant’s tool box. Although budgeting is actually an activity perFormed by management, the management accountant’s assistance is required because the fnal budget is presented in the Form oF planned fnancial statements. The process For budgeting requires From management a set oF careFully planned decisions. There are two primary phases in the budgeting process: (1) planning and (2) control. The frst phase is the primary subject matter oF this chapter. The second phase, control or perFormance evaluation as it is recognized in accounting, is the primary subject matter oF chapter 14 The budgeting process is an all encompassing task that brings in Focus all short and long run goals and objectives oF the business. The process oF preparing a budget compels management to explicitly recognize and assign quantitative values to all marketing, production, and fnancial decisions. A major reason For preparing a comprehensive budget is to obtain a measure oF the impact oF interrelated decisions on net income, fnancial position, and cash ±ow. However, the benefts oF budgeting extend beyond the expression oF decisions into numbers. Benefts oFten cited For budgeting include: 1. Recognition/improvement oF organizational structure 2. Increased emphasis on setting oF long-term objectives 3. Increased motivation to achieve objectives 4. Explicit recognition oF important decision relationships 5. Better coordination oF activities by managers 6. Improved proft perFormance 7. Better perFormance evaluation
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
138 | CHAPTER EIGHT Comprehensive Business Budgeting Board of Directors President Vice-President Production Manager Finishing Dept. Manager Cutting Dept Manager Finishing Dept. Vice-President Finance Vice-President Marketing Accounting Department Income Statement Balance Sheet The end result of the budgeting process is a set of balanced and coordinated decisions quantitatively presented as a set of budgeted Fnancial statements. ±or a manufacturing business, the Fnal product of budgeting is a: 1 Budgeted balance sheet 2 Budgeted income statement (Including cost of goods manufactured statement) 3 Cash budget 4 Capital expenditures budget The preparation of a complete budget usually involves the preparation of several sets of tentative budgets. The Fnal product is often the result of trial and error procedures. The Frst completed budget may not re²ect the amount of desired proFt. Consequently, management in an attempt to budget better performance may change one or more decisions during the budgeting process. The consequence of a single change can easily require computational changes in all budgets and supporting schedules. The modern use of computers and special Fnancial software removes the
Background image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 03/23/2010 for the course ACC_ 02 taught by Professor Zeegal during the Fall '10 term at Missouri State University-Springfield.

Page1 / 24

chapter8 - Management Accounting | 137 Comprehensive...

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online