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8 terms

Accounting Ch8

boooooo stupid tests.
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What is a budget?
A budget is the quantitative expression of a plan of action for a specified period and an aid to coordinating and implementing that plan.
What is responsibility accounting?
Responsibility accounting is a system in which a manger is held responsible for those revenues, costs and investments that the manager can control to a significant extent.
What is a master budget?
A master budget represents a summary of all management's plans and goals for a specified period in the future, usually one year. It is made up of smaller budgets and usually contains a budgeted income statement, budgeted balance sheet and cash budget.
What effect does the level of sales have on a firm?
The level of sales impacts all firm activities. It determines production budget, cash collections, cash disbursements and SG&A budget, which then determine cash budget, budgeted income statement and balance sheet.
Are planning and control the same?
No, planning involves developing goals and budgets to achieve those goals. Control involves means by which management attempts to ensure that the goals set down are attained.
What is a self-imposed budget?
A self-imposed budget is one in which person with responsibility over cost control prepare their own budget.
What are advantages of a self-imposed budget?
1) Members feel valued, which increases self-esteem. 2) Budgets by front-line managers are often more accurate. 3) Motivation is generally higher. 4) Managers can't claim unrealistic budgets.
What is the purpose of a cash budget?
The purpose is not to see how much cash they have, but to provide information on probable cash needs during the budget period so that financing can be arranged.