Chapter 11 Accounting

20 terms by BMenzel 

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Budgets

plans dealing with the acquisition and use of resources over a specified time period

Planning

the cornerstone of good management; involves developing objectives and goals for the organization, as well as the actual preparation of budgets

Operating

involves day-to-day decision making by managers, which is often facilitated by budgeting

Control

involves ensuring that the objectives and goals developed by the organization are being attained; often involves a comparison of budgets to actual performance and the use of budgets for performance evaluation purposes

Zero-based budgeting

requires managers to build budgets from the ground up each year

Participatory budgeting

a budgeting process that starts with departmental managers and flows up through middle management and then to top management. Each new level of management has responsibility for reviewing and negotiating any changes in the proposed budget

Master budget

consists of an interrelated set of budgets prepared by a business

Sales forecast

combines with the sales budget to form the starting points in the preparation of production budgets for manufacturing companies, purchases budgets for merchandising companies, and labor budgets for service companies

Sales budget

used in planning the cash needs for manufacturing, merchandising, and service companies

Operating budgets

used to plan for the short term

Production budget

used to forecast how many units of product to produce in order to meet the sales projections

Material purchases budget

used to project the dollar amount of raw materials purchased for production

Direct labor budget

used to project the dollar amount of direct labor cost needed for production

Manufacturing overhead budget

used to project the dollar amount of manufacturing overhead needed for production

Cash receipts budget

used to project the amount of cash expected to be received from sales and cash collections from consumers

Cash disbursements budget

used to project the amount of cash to be disbursed during the budget period

Summary cash budget

Consists of three sections: (1) cash flows from operating activities, (2) cash flows from investing activities, and (3) cash flows from financing activities; these three sections are the same as those used in the cash flow statement prepared under generally accepted accounting principles

Pro forma financial statements

budgeted financial statements that are sometimes used for internal planning purposes but more than often are used by external users

Static budgets

budgets that are set at the beginning of the period and remain constant throughout the budget period

Flexible budgets

budgets that take differences in spending owing to volume differences out of the analysis by budgeting for labor based on the actual number of units produced

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