Chapter 13 - 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 13 WILEY Kimmel ● Weygandt ● Kieso Survey of Accounting, First Edition CHAPTER OUTLINE State the essentials of effective budgeting and the components of the master budget. 1 LEARNING OBJECTIVES Prepare budgets for sales, production, and direct materials. 2 Prepare budgets for direct labor, manufacturing overhead, and selling and administrative expenses, and a budgeted income statement. 3 Prepare a cash budget and a budgeted balance sheet. 4 Apply budgeting principles to nonmanufacturing companies. 5 Budget: a formal written statement of management’s plans for a specified future time period, expressed in financial terms. Primary method of communicating agreed-upon objectives throughout the organization. Promotes efficiency. Control device - important basis for performance evaluation once adopted. LO 1 LEARNING OBJECTIVE State the essentials of effective budgeting and the components of the master budget. 1 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 LO 1 Primary 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. It motivates personnel throughout organization to meet planned objectives. THE BENEFITS OF BUDGETING LO 1 Which of the following is not a benefit of budgeting? Management can plan ahead. An early warning system is provided for potential problems. It enables disciplinary action to be taken at every level of responsibility. The coordination of activities is facilitated. Question THE BENEFITS OF BUDGETING LO 1 Depends on a sound . | Budgetary Planning 13 WILEY Kimmel ● Weygandt ● Kieso Survey of Accounting, First Edition CHAPTER OUTLINE State the essentials of effective budgeting and the components of the master budget. 1 LEARNING OBJECTIVES Prepare budgets for sales, production, and direct materials. 2 Prepare budgets for direct labor, manufacturing overhead, and selling and administrative expenses, and a budgeted income statement. 3 Prepare a cash budget and a budgeted balance sheet. 4 Apply budgeting principles to nonmanufacturing companies. 5 Budget: a formal written statement of management’s plans for a specified future time period, expressed in financial terms. Primary method of communicating agreed-upon objectives throughout the organization. Promotes efficiency. Control device - important basis for performance evaluation once adopted. LO 1 LEARNING OBJECTIVE State the essentials of effective budgeting and the components of the master budget. 1 Historical accounting data on revenues, costs, and expenses .
