PAC Kean ACCT 2210 Ch23PPT Article

Prepared by

Coby Harmon

College or university of A bunch of states, Santa Barbara

Westmont University

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twenty three

Budgetary Planning

Learning Aims

After learning this part, you should be capable to:

[1] Reveal the benefits of cost management.

[2] Condition the essentials of effective cash strategy.

[3] Recognize the costs that comprise the expert budget.

[4] Describe the sources pertaining to preparing the budgeted income statement. [5] Explain the main sections of a cash finances.

[6] Reveal the applicability of cash strategy in nonmanufacturing companies.

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Preview of Chapter 23

Accounting Concepts

Eleventh Edition

Weygandt Kimmel Kieso

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Budgeting Essentials

Budget: a formal written affirmation of management's plans

for a specified upcoming time period, stated in financial terms. пЃµ

Main method of interacting agreed-upon goals

throughout the organization.

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Promotes efficiency.

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Control device -- important basis for efficiency evaluation

once adopted.

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LO you Indicate the key benefits of budgeting.

Cost management Basics

Spending budget and Accounting

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Historical accounting info on profits, costs, and

expenses help in formulating long term budgets.

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Accountants normally responsible for offering

management's cash strategy goals economic terms.

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The budget as well as its administration would be the responsibility of

management.

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LO you Indicate the advantages of budgeting.

Spending budget Basics

Some great benefits of Budgeting

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Requires every levels of managing to prepare.

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Delivers definite goals for analyzing performance.

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Creates an earlier warning system for potential problems.

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Facilitates coordination of activities within the business.

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Ends in greater managing awareness of the entity's

total operations.

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Motivates employees throughout business to meet

planned objectives.

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LO you Indicate the benefits of budgeting.

Budgeting Basics

Issue

Which from the following is usually not a advantage of budgeting?

a. Management may plan ahead.

b. An early alert system is provided for potential concerns. c. It enables disciplinary action that must be taken at every amount of responsibility.

g. The coordination of activities is caused.

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LO 1 Suggest the benefits of cost management.

Budgeting Essentials

Essentials of Effective Spending budget

пЃµ

Is determined by a audio organizational structure with

expert and responsibility for all stages of procedures

clearly defined.

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пЃµ

Based upon research and analysis with realistic goals.

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Acknowledged by every levels of management.

LO 2 State the requirements of effective budgeting.

Budgeting Basics

Length of the Budget Period

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May be well prepared for any time frame.

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Most usual - 12 months.

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Supplement with regular monthly and quarterly budgets.

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Different financial constraints may cover different time periods.

Long enough to supply an possible goal and minimize

seasonal or cyclical fluctuations.

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Short enough to get reliable estimates.

LO 2 State the necessities of powerful budgeting.

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Budgeting Essentials

The Cost management Process

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Base spending budget goals about past overall performance

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Gather data via organizational products.

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Start several months just before end of current season.

Develop spending budget within the platform of a sales forecast.

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Shows potential industry revenue.

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Reveals company's predicted share.

LO 2 Condition the essentials of effective cash strategy.

Budgeting Fundamentals

The Budgeting Process

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Factors regarded as in Sales Forecasting:

1 ) General financial conditions

2 . Industry trends

3. Researching the market studies

four. Anticipated marketing and advertising

5. Previous market share

six. Price changes

7. Scientific developments

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LO 2 State the requirements of effective budgeting.

Cash strategy Basics

Cost management and Individual Behavior

Participative Budgeting: Every level of supervision should

be...