Summary: Fma ||

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  • 1 Training 1

  • What is a budget?

    A budget provides a comprehensive overview of planned company operations.
  • What are benefits of budgets?

    • Budgets provide an opportunity to re-evaluate existing activities and evaluate new ones.
    • They aid managers in communicating objectives and coordinating actions across the organization
    • Budgeting provides benchmarks to evaluate subsequent performance
  • What are the factors that limit the advantages of budgeting?

    1. Low levels of participation in the budget and  a lack of acceptance of responsibility for the final budget.
    2. Incentives to lie and cheat in the budget process. (dysfunctional incentives)
    3. Difficulties in obtaining accurate sales forecasts
  • What are dysfunctional incentives?

    Lyring, cheating: budgetary slack
  • What is budgetary slack?

    Is the overstatement of budgeted costs to create a goal that is easier to achieve
  • What is a sales forecast?

    Is a prediction of  sales under a given set of conditions.
  • 2 Training 2

    This is a preview. There are 5 more flashcards available for chapter 2
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  • Name the several types of different types of budgets.

    1. Strategic plan (5 years)
    2. Long-range planning
    3. Master budget (1 year)
    4. Capital budget
    5. Continuous budget 1 year (-1 month+1 month)
  • What is a strategic plan?

    This sets the overall goals and objectives of the organization. THe strategic plan leads to long-range planning, which produces forecasted financial statements for five- to ten -year periods.
  • What is a long-range plan?

    Therse are coordinated with capital budgets, which detail the planned expenditures for facilities, equipment, new products and other long-term investments.
  • What is the master budget?

    The master budget is a detailed and comprehensive analysis of the first year of the long-range plan. It summarized the planned activities of all subunits of an organization.
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