PAC Kean ACCT 2210 Ch23PPT
Prepared by
Coby Harmon
University of California, Santa Barbara
Westmont College
23-1
23
Budgetary Planning
Learning Objectives
After studying this chapter, you should be able to:
[1] Indicate the benefits of budgeting.
[2] State the essentials of effective budgeting.
[3] Identify the budgets that comprise the master budget.
[4] Describe the sources for preparing the budgeted income statement.
[5] Explain the principal sections of a cash budget.
[6] Indicate the applicability of budgeting in nonmanufacturing companies.
23-2
Preview of Chapter 23
Accounting Principles
Eleventh Edition
Weygandt Kimmel Kieso
23-3
Budgeting Basics
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.
23-4
LO 1 Indicate the benefits of budgeting.
Budgeting Basics
Budgeting and Accounting
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. 23-5
LO 1 Indicate the benefits of budgeting.
Budgeting Basics
The 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.
Motivates personnel throughout organization to meet planned objectives.
23-6
LO 1 Indicate the benefits of budgeting.
Budgeting Basics
Question
Which of the following is not a benefit of budgeting?
a.Management can plan ahead.
b.An early warning system
Coby Harmon
University of California, Santa Barbara
Westmont College
23-1
23
Budgetary Planning
Learning Objectives
After studying this chapter, you should be able to:
[1] Indicate the benefits of budgeting.
[2] State the essentials of effective budgeting.
[3] Identify the budgets that comprise the master budget.
[4] Describe the sources for preparing the budgeted income statement.
[5] Explain the principal sections of a cash budget.
[6] Indicate the applicability of budgeting in nonmanufacturing companies.
23-2
Preview of Chapter 23
Accounting Principles
Eleventh Edition
Weygandt Kimmel Kieso
23-3
Budgeting Basics
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.
23-4
LO 1 Indicate the benefits of budgeting.
Budgeting Basics
Budgeting and Accounting
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. 23-5
LO 1 Indicate the benefits of budgeting.
Budgeting Basics
The 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.
Motivates personnel throughout organization to meet planned objectives.
23-6
LO 1 Indicate the benefits of budgeting.
Budgeting Basics
Question
Which of the following is not a benefit of budgeting?
a.Management can plan ahead.
b.An early warning system