ACTG 2020 Chapter Notes - Chapter 9: Budget, Income Statement, Profit Motive
16 Mar 2014
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Document Summary
Budgets are an important tool that management uses to communicate financial objectives for the coming years, allocate resources, and coordinate activities across different functional areas w/in an org. A budget is a quantitative plan for the acquisition and use of financial and other resources over a specified future time period. Master budget is a summary of a company"s plan in which specific targets are set for sales, production, distribution, and financing activities. Generally culminates in a cash budget, a budgeted income statement, and a budgeted balance sheet. Planning involves developing objectives and preparing budgets to achieve these objectives. Facilitates future planning, communication of management"s plans throughout the org. Bottlenecks is when a machine, activity, or process limits total output b/c it"s operating at capacity; budgets help identify bottlenecks. Budgeting can help coordinate activities of the org by integrating plans. Defines goals and objectives that can serve as benchmarks.
