Budget

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What is a budget?
A financial plan for the future concerning the revenues and costs of a business
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Define: favourable variance
Where actual results are better than budgeted (e.g. revenues are higher, costs are
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Define; adverse variance
Where actual results are worse than budgeted (e.g. revenues are lower, costs are
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Identify four different purposes of budgeting by management:
Establish priorities & set targets, Provide direction and co-ordination, Assign responsibilities, Allocate resources, Motivate staff (e.g. linking rewards to beating budget), Monitor performance
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Define Variance
the difference between the budgeted amount and actual amount for each item in a budget
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Define Variance Analysis
the process of identifying, analysing and evaluating the reasons for variances between
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Card 2

Front

Define: favourable variance

Back

Where actual results are better than budgeted (e.g. revenues are higher, costs are

Card 3

Front

Define; adverse variance

Back

Preview of the front of card 3

Card 4

Front

Identify four different purposes of budgeting by management:

Back

Preview of the front of card 4

Card 5

Front

Define Variance

Back

Preview of the front of card 5
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