WRD_ch22

Accounting

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Unformatted text preview: 11-122-1Budgeting2211-222-2Learning Objective 13-1Describe the nature of the adjusting process.Learning Objective 13-1Describe the nature of the adjusting process.Insert Chapter ObjectivesBudgeting1Describe budgeting, its objective, and its impact on human behavior.2Describe the basic elements of the budget process, the two major types of budgeting, and the use of computers in budgeting.After studying this chapter, you should be able to:22-23Describe the master budget for a manufacturing company.11-322-3Budgeting (continued)4Prepare the basic income statement budgets for a manufacturing company.22-35Prepare balance sheet budgets for a manufacturing company.11-422-422-41Describe budgeting, its objectives, and its impact on human behavior.11-522-5BudgetsBudgetsplay an important role for organizations of all sizes and forms. Budgets are used in managing the operations of government agencies, churches, hospitals, and other nonprofit organizations.111-622-6Estimated Portion of Your Total Monthly Income That Should Be Budgeted for Various Living Expenses111-722-71.Planning involves setting goals as a guide for making decisions.Objectives of Budgeting11.Directing involves decisions and actions to achieve budgeted goals.1.Controlling involves comparing actual performance against the budgeted goals.11-822-8Planning, Directing, and Controlling1Exhibit 111-922-9A budgetary unit of a company is called responsibility center. Each responsibility center is led by a manager who has the authority and responsibility for achieving the center’s budgeted goals.Responsibility Centers111-1022-10Controlling Through FeedbackAs time passes, the actual performance of an operation can be compared against the planned goals. This provides prompt feedback to employees about their performance. If necessary, employees can use such feedback to adjust their activities in the future.111-1122-11Human Behavior Problems in BudgetingHuman behavior problems can arise if—1.the budget goal is too tight and very hard for the employee to achieve.1Exhibit 2(continued)11-1222-12Human behavior problems can arise if—1.the budget goal is too loose and very easy for the employee to achieve.1Human Behavior Problems in Budgeting(continued)Exhibit 2(continued on Slide 14)11-1322-13Although it is desirable to establish attainable goals, it is undesirable to plan lower goals than may be possible. Such budget “padding” is termed budgetary slack.Budgetary Slack111-1422-14Human behavior problems can arise if—1.the budget goals of a business conflict with the objectives of the employees.1Human Behavior Problems in Budgeting(concluded)Exhibit 211-1522-15Goal conflictoccurs when individual self-interest differs from business objectives or when different departments are given conflicting objectives....
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WRD_ch22 - 11-122-1Budgeting2211-222-2Learning Objective...

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