plans and objectives of the various parts. C. It ensures that accounting records comply with generally accepted
accounting principles. D. It provides benchmarks for evaluating subsequent performance.
Zero-Base Budgeting
Managers are required to justify all budgeted expenditures, not just changes in the budget from the previous year. The baseline is zero rather than last year’s budget.
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2020/9/9
Planning and Control
• Planning -- involves developing objectives and preparing various budgets to achieve these objectives.
• Control -- involves the steps taken by management that attempt to ensure the objectives are attained.
•A method of budgeting in which the cost of each program must be justified every year is called:
A) operational budgeting. B) zero-based budgeting. C) continuous budgeting. D) responsibility accounting.
•Which of the following is not a benefit of budgeting?
A. It uncovers potential bottlenecks before they occur. B. It coordinates the activities of the entire organization by integrating the
•Parlee Company's sales are 30% in cash and 70% on credit. Sixty percent of the credit sales are collected in the month of sale, 25% in the month following sale, and 12% in the second month following sale. The remainder are uncollectible. The following are budgeted sales data:
•A) responsibility accounting. •B) contribution accounting. •C) absorption accounting. •D) operational budgeting.
Choosing the Budget Period
•Operating Budget
•1999
•2000
•The annual operating budget •may be divided into quarterly
•or monthly budgets.
•2001
•2002
Choosing the Budget Period
•Continuous or •Perpetual Budget
Advantages of Budgeting
•Communicating •plans
•Coordinate •activities
•Define goal •and objectives
•Advantages
•Uncover potential •bottlenecks
•Think about and •plan for the future
•Flow of Budget Data
The Budget Committee
A standing committee responsible for
• overall policy matters relating to the budget • coordinating the preparation of the budget
•Fairmont Inc. uses an accounting system that charges costs to the manager who has been delegated the authority to make decisions concerning the costs. For example, if the sales manager accepts a rush order that will result in higher than normal manufacturing costs, these additional costs are charged to the sales manager because the authority to accept or decline the rush order was given to the sales manager. This type of accounting system is known as:
•Means of allocating •resources
Responsibility Accounting
Managers should be held responsible for those items — and only those items — that
the Байду номын сангаасanager can actually control to a significant extent.
•1999
•2000
•2001
•This budget is usually a twelve-month •budget that rolls forward one month •as the current month is completed.
•2002
Participative Budget System