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Lecture Accounting: Tools for business decision making (5th edition): Chapter 21 - Kimmel, Weygandt, Kieso

Chapter 21 - Budgetary planning. After reading the material in this chapter, you should be able to: State the essentials of effective budgeting and the components of the master budget; prepare budgets for sales, production, and direct materials; prepare a cash budget and a budgeted balance sheet. | BUDGETARY PLANNING Accounting, Fifth Edition 21 After studying this chapter, you should be able to: Indicate the benefits of budgeting. State the essentials of effective budgeting. Identify the budgets that comprise the master budget. Describe the sources for preparing the budgeted income statement. Explain the principal sections of a cash budget. Indicate the applicability of budgeting in non-manufacturing companies. Learning Objectives Preview of Chapter 21 Accounting Fifth Edition Kimmel Weygandt Kieso Budget: a formal written statement of management’s plans for a specified future time period, expressed in financial terms. Primary way to communicate agreed-upon objectives to all parts of the company. Promotes efficiency. Control device - important basis for performance evaluation once adopted. Budgeting Basics LO 1 Indicate the benefits of budgeting. Historical accounting data on revenues, costs, and expenses help in formulating future budgets. Accountants normally responsible for presenting management’s budgeting goals in financial terms. The budget and its administration are the responsibility of management. Budgeting and Accounting Budgeting Basics LO 1 Indicate the benefits of budgeting. Requires all levels of management to plan ahead. Provides definite objectives for evaluating performance. Creates an early warning system for potential problems. Facilitates coordination of activities within the business. Results in greater management awareness of the entity’s overall operations. Motivates personnel throughout organization to meet planned objectives. The Benefits of Budgeting LO 1 Indicate the benefits of budgeting. Budgeting Basics Which of the following is not a benefit of budgeting? a. Management can plan ahead. b. An early warning system is provided for potential problems. c. It enables disciplinary action to be taken at every level of responsibility. d. The coordination of activities is facilitated. Review Question LO 1 Indicate the benefits of . | BUDGETARY PLANNING Accounting, Fifth Edition 21 After studying this chapter, you should be able to: Indicate the benefits of budgeting. State the essentials of effective budgeting. Identify the budgets that comprise the master budget. Describe the sources for preparing the budgeted income statement. Explain the principal sections of a cash budget. Indicate the applicability of budgeting in non-manufacturing companies. Learning Objectives Preview of Chapter 21 Accounting Fifth Edition Kimmel Weygandt Kieso Budget: a formal written statement of management’s plans for a specified future time period, expressed in financial terms. Primary way to communicate agreed-upon objectives to all parts of the company. Promotes efficiency. Control device - important basis for performance evaluation once adopted. Budgeting Basics LO 1 Indicate the benefits of budgeting. Historical accounting data on revenues, costs, and expenses help in formulating future budgets. Accountants normally responsible for