ACCT 2001 Chapter : Chapter 21
Document Summary
Budgeting basics: budget a formal written statement of management"s plans for a specific future time period, expressed in financial terms. It provides definite objectives for evaluating performance at each level of responsibility. It creates an early warning system for potential problems so that management can make change before things get out of hand. It facilitates the coordination of activities within the business. It does this by correlating the goals of each segment with overall company objectives. Thus the company can integrate production and sales promotion with expected sales. It results in greater management awareness of the entitys overall operations and the impact on operations of external factors, such as economic trends. Indicates the expected profitability of operations for the budget period. Ending cash balance ,900, shown in the cash budget (illustration 21-17). 40% of fourth-quarter sales ,000, shown in the schedule of expected collections from customers (illustration 21-15).
