Ch 9 outline fill

Managerial Accounting: Creating Value in a Dynamic Business Environment

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Ch 9 Profit Planning and Activity Based Budgeting Chapter Overview Budget - a detailed plan, expressed in quantitative terms, that specifies how resources will be  acquired and used during a specified period of time Budget system - the procedures used to develop a budget I. Purposes of Budgeting Systems  1. Planning 2. Facilitating Communication and Coordination 3. Allocating Resources 4. Controlling Profit and Operations 5. Evaluating Performance and Providing Incentives II. Types of Budgets Budgets are developed for specific time periods: Short-range budgets      cover a year, a quarter, or a month Rolling (Continuous) Budget- usually a 12 mo. Budget that rolls forward one  month as the current month is completed Long-range budgets      cover periods longer than a year Capital budgets with acquisitions that normally cover several years Financial budgets with financial resource acquisitions A. Master budget (a.k.a.  profit plan) A comprehensive set of detailed budgets covering all phases of an organization’s operations  for a specified period of time Covering all phases of a company’s operations B. Pro-forma financial statements (a.k.a.  budgeted financial statements) Show how the organization’s financial statements will appear at a specified time if  operations proceed according to plan.  Include a  budgeted o Income Statement o Balance Sheet o Statement of Cash Flows C. Capital budget A plan for the acquisition of capital assets, such as buildings and equipment D. Rolling budget
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(a.k.a.  revolving budgets  or  continuous budgets ) Are continually updated by periodically adding a new incremental time period, such as a  quarter, and dropping the period just completed
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Ch 9 outline fill - Ch9...

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