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Unformatted text preview: Study Questions for Chapter 22 BUS 130 Accounting 2 LeAnna Kaiser 1. Define budgeting and discuss how budgeting affects the various functions of management. Budgeting: is the process of 1) establishing specific goals (which applies the planning function of management- all departments & org units must establish their goals for the future through budgeting), 2) executing plans to achieve the goals (applies the directing function- aids in coordinating management’s decisions and actions to achieve the company’s budgeted goals), and 3) periodically comparing actual results with the goals (applies the controlling function- compare actual performance against budgeted goals to provide feedback about performance & improve). 2. Describe the effects of setting budget goals too tightly or too loosely. What is goal conflict and how does it effect organizations? Too tight: workers may become discouraged- if viewed as unrealistic or unachievable, it may affect performance negatively Too loose: budgetary slack can cause a “spend it or lose it” mentality. Spend on unnecessary purchases in Too loose: budgetary slack can cause a “spend it or lose it” mentality....
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