A continuous budget is a A continuous budget is a 12-month budget that rolls 12-month budget that rolls forward one month (or quarter) forward one month (or quarter). as the current mont[r]
(1)PowerPoint Authors:
Susan Coomer Galbreath, Ph.D., CPA Charles W Caldwell, D.B.A., CMA Jon A Booker, Ph.D., CPA, CIA Cynthia J Rooney, Ph.D., CPA
Copyright © 2014 by The McGraw-Hill Companies, Inc All rights reserved. Profit Planning
(2)Budgeting
A budget is a detailed quantitative plan for
acquiring and using financial and other resources over a specified forthcoming time period.
1 The act of preparing a budget is called
budgeting.
2 The use of budgets to control an
organization’s activities is known
(3)Planning and Control
Planning –
involves developing objectives and
preparing various budgets to achieve those objectives.
Planning –
involves developing objectives and
preparing various budgets to achieve those objectives.
Control –
involves the steps taken by management to
increase the likelihood that the objectives set down
while planning are attained and that all parts of the
organization are working together toward that goal.
Control –
involves the steps taken by management to
increase the likelihood that the objectives set down
while planning are attained and that all parts of the
(4)Advantages of Budgeting
Advantages
Define goals Define goals and objectives and objectives
Uncover potential Uncover potential
bottlenecks bottlenecks Coordinate
Coordinate activities activities Communicate
plans
Means of allocating Means of allocating
(5)Responsibility Accounting
Managers should be Managers should be held responsible for
held responsible for
those items - and
those items - and onlyonly
those items - that they
those items - that they
can actually control
can actually control
to a significant extent.
(6)Choosing the Budget Period
Operating Budget
2011 2012 2013 2014
Operating budgets ordinarily Operating budgets ordinarily
cover a one-year period cover a one-year period
corresponding to a corresponding to a
company’s fiscal year Many company’s fiscal year Many
companies divide their companies divide their
annual budget annual budget into four quarters into four quarters
Operating budgets ordinarily Operating budgets ordinarily
cover a one-year period cover a one-year period
corresponding to a corresponding to a
company’s fiscal year Many company’s fiscal year Many
companies divide their companies divide their
annual budget annual budget into four quarters into four quarters
A continuous budget is a A continuous budget is a 12-month budget that rolls 12-month budget that rolls forward one month (or quarter) forward one month (or quarter)
as the current month (or as the current month (or
quarter) is completed quarter) is completed A continuous budget is a
A continuous budget is a
12-month budget that rolls
12-month budget that rolls
forward one month (or quarter)
forward one month (or quarter)
as the current month (or
as the current month (or
quarter) is completed
(7)Self-Imposed Budget
A self-imposed budget or participative budget is a budget that is prepared with the full cooperation and participation of
managers at all levels
S u p e r v is o r S u p e r v is o r M id d l e
M a n a g e m e n t
S u p e r v i s o r S u p e r v i s o r M id d le