• Created by: amyclaire
  • Created on: 01-06-19 18:10
External purposes
Procurement of finance
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Internal purposes
management accounting internal control
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Internal communication, participation, focus on objectives, consideration of potential problems, can motivate (target)
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Methods of forecasting demand (to arrive at sales budget)
Time series (existing), previous launch data (new brands), survey of buyer intentions (new product identified market)
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A budget should inform staff
Where the company is supposed to be, how it will get there
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Functions of budgets
Planning, coordinating, communicating, motivating, controlling, evaluating management performance
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Master Budgets
Cash budgets, only drawn up once sub budgets for revenues & expenses drawn up
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Construct budget, coordinate budgets (master budget), implement (commit resources), control & review using data, react and revise if necessary
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Production Budget
Sales volume + closing stock - opening stock
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Budget constrained style
Evaluation based on meeting costs/ budget, high job tension, potential manipulation of accounting figures, poor relations- inappropriate of uncertain outcomes
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Profit conscious style
Budgets target, but just 1 indicator, can miss budget to make profit, high cost involvement, medium tension, little incentive to manipulate, good relations
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Non- accounting style
Data unimportant in performance evaluation, low cost involvement, medium tension, good relations
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Types of units depending on level of centralisation
Cost centres, profit centres, investment centres
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Benefits of cost centres (high centralisation)
Consistency, avoids maverick management, individual responsibility
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Inflexibility, opportunity cost of senior management time, middle managers don't develop, budget the bible
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PC benefits
Increased motivation & satisfaction for some
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Achieving culture change, selling autonomy to theory X staff
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Benefits IC
Senior managers manage, middle managers broaden skill base, increased reaction speed
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Finding skills staff, achieving goal congruence, duplication
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Other cards in this set

Card 2


Internal purposes


management accounting internal control

Card 3




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Card 4


Methods of forecasting demand (to arrive at sales budget)


Preview of the front of card 4

Card 5


A budget should inform staff


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