budget and budgeting

the act of preparing the budget

the use of budgets to control an organization's activity

involves developing objectives and preparing various budget to achieve these objectives

involves the steps taken by management that attempt to ensure the objectives are attained

what are the six advantages of budgeting

Answer explanation

-define goals and objective

-think about and plan for the future

• -means of allocating resources

• -uncover potential bottlenecks

• -coordinate activities

• -communicate plans

managers should be held responsible for those items-and only those items-that manager can actually control to a significant extent

a budget is prepared with the full cooperation and participation of managers at all levels.

= participative budget

what are the four advantages of self-imposed budget?

Answer explanation

1. -individuals at all levels of the organization are viewed as members of the team whose judgement are valued by top management

2. -budget estimates prepared by front-line managers are often more accurate than estimates prepared by top managers

3. -motivation is generally higher when individuals participate in setting their own goals than when the goals are imposed above

4. A -a manager who is not able to meet a budget imposed from above can claim that it was unrealistic. A self-imposed budget eliminates this explanation.

what are three human factors in budgeting?

Answer explanation

• top management must be enthusiastic and committed to the budget process

• -top management must not use the budget to pressure employees or blame them when something goes wrong

• -highly achievable budget targets are usually preferred when managers are rewarded based on meeting budget targets

what are the three major categories in the cash flow statement?

Answer explanation

1. -operating activities

2. -investing activities

3. -financing activities