Chapter 24 - The budgeting process. Chapter 24 covers the budgeting process. It goes from developing the master budget, through to the cash budget, budgeted income statement, and budgeted balance sheet. It concludes with a discussion of responsibility accounting. | The Budgeting Process Multimedia Slides by: Gail A. Mestas, MAcc, New Mexico State University Chapter 24 Learning Objective Define budgeting and explain its role in the management cycle. Identify the elements of a master budget in different types of organizations and the guidelines for preparing budgets. Prepare the operating budgets that support the financial budgets. Learning Objective (cont’d) Prepare a budgeted income statement, a cash budget, and a budgeted balance sheet. Describe management’s role in budget implementation. The Budgeting Process Objective 1 Define budgeting and explain its role in the management cycle Budgeting is the process of identifying, gathering, summarizing, and communicating financial and nonfinancial information about an organization's future activities Is essential part of the continuous planning for an organization in order to accomplish long-term goals The Budgeting Process Budgets Plans of action based on forecasted transactions, activities, and . | The Budgeting Process Multimedia Slides by: Gail A. Mestas, MAcc, New Mexico State University Chapter 24 Learning Objective Define budgeting and explain its role in the management cycle. Identify the elements of a master budget in different types of organizations and the guidelines for preparing budgets. Prepare the operating budgets that support the financial budgets. Learning Objective (cont’d) Prepare a budgeted income statement, a cash budget, and a budgeted balance sheet. Describe management’s role in budget implementation. The Budgeting Process Objective 1 Define budgeting and explain its role in the management cycle Budgeting is the process of identifying, gathering, summarizing, and communicating financial and nonfinancial information about an organization's future activities Is essential part of the continuous planning for an organization in order to accomplish long-term goals The Budgeting Process Budgets Plans of action based on forecasted transactions, activities, and events Are synonymous with managing an organization Essential to accomplishing goals in the strategic plan The Budgeting Process (cont’d) Budgets are used to Communicate information Coordinate activities and resource usage Motivate employees Evaluate performance Manage and account for cash Establish minimum levels of cash receipts and expenditures The Budgeting Process (cont’d) Many forms of budgets Examples Cash budget Focuses on financial information Shows, among other things, how cash resources will be allotted to operating, investing, and financing activities over a future period Production budget Focuses on nonfinancial information Shows planned production in units Identifies activities needed to meet certain requirements or standards Budgeting and Goals Strategic planning Process by which management establishes an organization’s long-term goals Long-Term Goals define the strategic direction an organization will take over a five- to ten-year period Are the basis for Making annual
