MA_Chapter7 - ACTG 1P11 MA CHAPTER 7 BUDGETING A. What are...

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

View Full Document Right Arrow Icon
ACTG 1P11 – MA CHAPTER 7 BUDGETING A. What are budgets? a. A budget is a formal written statement of management's plans for a specified time period, expressed in financial terms. b. Accounting serves to provide the historical financial information, express management’s plans in financial terms and to prepare budget reports B. Use of budgets in planning and control 1. Planning - budgets are useful in the planning process because they enhance: a. Communication b. Coordination 2. Control - budgets are useful in the control process because they provide a basis for: a. Evaluating performance (compare actual to budget) 3. Significant deviations ( variances ) occur because: a. The budget was poorly conceived. b. The conditions that the budget was based on have changed. c. Managers did a particularly good or bad job. Planning results in the preparation of budgets; control arises when the budget is used to compare actual results to planned (budgeted) results. Budget reports present these comparisons. C. Why Budget? c. Maximize use of scarce resources d. Plan, communicate, coordinate, control e. Specific benefits of budgeting:
Background image of page 1

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

View Full DocumentRight Arrow Icon
It requires all levels of management to plan ahead. It provides definite objectives for evaluating performance.
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.

Page1 / 6

MA_Chapter7 - ACTG 1P11 MA CHAPTER 7 BUDGETING A. What are...

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