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Ch 6 404 - Paul Ramirez ACCTG 404 Reference Guide Chapter 6...

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Paul Ramirez ACCTG 404 Reference Guide Chapter 6: Master Budget and Responsibility Accounting Activity-based budgeting Budgeting approach that focuses on the budgeted cost of the activities necessary to produce and sell products and services Budgetary slack The practice of underestimating budgeted revenues, or overestimating budgeted costs, to make budgeted targets more easily achievable Cash budget Schedule of expected cash receipts and disbursements Continuous budget See rolling budget Controllability Degree of influence that a specific manager has over costs, revenues, or related items for which he or she is responsible Controllable cost Any cost that is primarily subject to the influence of a given responsibility center manager for a given period Cost center Responsibility center where the manager is accountable for costs only Financial budget Part of the master budget that focuses on how operations and planned capital outlays affect cash. IT is made up of the capital expenditures budget, the cash budget, the budget balance sheet, and the budgeted statement of cash flows Financial planning models Mathematical representations of the relationships among operating activities, financial activities, and other factors that affect the master budget Investment center Responsibility center where the manager is accountable for investments, revenues, and costs Kaizen budgeting Budgetary approach that explicitly incorporates continuous improvement anticipated during the budget period in the budget numbers Master budget Expression of management’s operating and financial plans for a specified period (usually a fiscal year) and includes a set of budgeted financial statements. Also called pro forma statements Operating budget Budgeted income statement and its supporting budgeted schedules Organization structure Arrangement of lines of responsibility within the organization Pro forma statements
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