BUS 215 Chapter Notes - Chapter 8: Income Statement
Chapter 8 Notes
• Budget – detailed plan for the future that is usually expressed in formal
quantitative terms
o Used for 2 purposes:
▪ Planning – developing goals and preparing various budgets
to achieve those goals
▪ Control – gathering feedback to ensure that the plan is
being properly executed or modified as circumstances
change
• Advantages:
o Budgets ouiate aageet’s plas throughout
organization
o Force managers to thank about and plan for the future
o Way to allocate resources to those parts of the organization
where they can be used most effectively
o Can uncover potential bottlenecks before they happen
o Coordinate the activities of the entire organization by
integrating plans of its various parts
o Defines goals and objectives that can serve as benchmarks
• Responsibility accounting – idea that manager should be held
responsible for those items that the manager can actually control to a
significant extent
• Continuous/perpetual budget – a 12-month budget that rolls forward
one month/quarter as the current month/quarter is completed
o Keeps managers focused one year ahead
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