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management 6
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budget
plan for the future
emerges from companys objectives, goals, and mission
looks forward (accounting looks back in time)
types of budgets
operating budget
capital budget
zero based budget
operating budget
most common, made from income statement, revenues and expenses
esimates for the next year if you have enough money to run the company
used in planning process (goals)
capital budget
includes estimated expenditures for fixed assets
takes into consideration long term purchases
assets that would benefit the company for many years
zero based budget
most difficult to prepare and provides the most detail
start with all revenues and expenses at 0 and need to justify each line to be necessary and realistic
used if company is overspending
benchmarking
compare one companys actual performance to other companies budget within the industry
5 key purposes for developing a budget
planning (how much money will be needed to operate)
supporting, communication and coordination (where money goes)
assigning resources
benchmarking
assessing performance (assess own performance over time)
steps of a budget
gather every financial statement and record all income and expenses
break expenses into fixed and variable
review monthly
methods of budget development
replicate the prior year and no changes
use last years with anticipated changes on each line
develop one using may years of info
personal income statement
income- cash inflows
expenditures- outflows
use ratios and analyze your personal spending
Author
marinir
ID
177593
Card Set
management 6
Description
budgeting
Updated
2012-10-14T20:02:40Z
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