Summary

Summary FBS222: Chapter 9

0 purchase

Course
Financial accounting (FBS222)

Institution
University Of Pretoria (UP)

This is an aesthetic summary of chapter 9 for FBS222 at the University of Pretoria. I used class notes, lecture slides, past papers and other notes to gather the information. This chapter appears in the sick test, and the exam. I made these notes in 2023 but the module doesn't change much over the ...

[Show more]

Last document update: 1 year ago

Preview 2 out of 11 pages

View example

Uploaded on October 18, 2023
File latest updated on October 22, 2023
Number of pages 11
Written in 2023/2024
Type Summary

fbs222

hannahashleighsteven Member since 5 year 117 documents sold

R80,00

Also available in package deal from R350,00

Add to cart

Save

100% satisfaction guarantee
Immediately available after payment
Both online and in PDF
No strings attached

Document also available in package deal (1)

FBS 222 EVERYTHING

R 650,00 R 350,00 8 items

1. Summary - Chapter 1- fbs 222
2. Summary - Chapter 2 - fbs 222
3. Summary - Fbs222: chapter 8
4. Summary - Fbs222: chapter 3
5. Summary - Fbs222: chapter 4
6. Summary - Fbs222: chapter 5
7. Summary - Fbs222: chapter 9
8. Summary - Fbs222: chapter 6
Show more

Budgeting and its role in planning, control and decision making.
I 2

All businesses should prepare budgets. Budgets help business owners and managers to plan, and
later, exercise control by comparing what happened to what was expected in the budget. Budgets
small businesses
formalize managers’ expectations regarding sales, prices, and costs.
D
7 Benefit from 3
profits
D
/ planning
Non + control
of
budgets

BUDGETING is the creation of a plan of action expressed in financial terms. Budgeting plays a key
role in planning, controlling, and decision making.

Planning and control
B
Planning and control are linked. Planning
·
Planning is looking forward to seeing what actions should be taken
to realize goals. Control
& sontrol is looking backward, determining what happened and comparing it with
the previously planned outcomes.

HOW CAN A BUDGET HELP IN PLANNING AND CONTROL?
A budget requires a plan. It also sets benchmarks that can be used to evaluate performance.

Before preparing a budget, a business should develop a strategic plan.
B
STRATEGIC PLAN plots a direction for an organisation’s future activities and operations over the next
5 years. The overall strategy is then translated into the long- and short-term objectives that form the
basis of the budget.

, Advantages of Budgeting
I
Planning: Budgeting forces management to plan. It encourages managers to develop an overall
direction for the organization, foresee problems, and develop future policies.
2
Information for decision making: Budgets improve decision making.
3
Standards for performance evaluation: Budgets set standards that can control the use of a
company’s resources and motivate employees. Control is achieved by comparing actual results with
budgeted results on a periodic basis. This feedback can prompt managers to take corrective action
if there is a large difference between actual and budgeted results.
4 Improved communication and coordination: Budgets serve to communicate and coordinate the
plans of the organisation to each employee and makes each employee aware of the role that they
need to play in achieving those objectives.

Master Budget
M Master Budget: comprehensive financial plan for the whole firm. The master budget is for a 1-year
period. Yearly budgets are broken down into quarterly and monthly budgets. The use of smaller time
periods allows managers to compare actual data with budgeted data more frequently, so problems
may be noticed and resolved sooner.
t Continuous Budget: a moving 12-month budget. As a month expires in the budget, an additional
month in the future is added so that the company always has a 12-month plan on hand. Continuous
budgeting forces managers to plan constantly. Most organizations prepare the master budget for
the coming year during the last 4 or 5 months of the current year.
⑱ Budget Committee: reviews the budget, provides policy guidelines and budgetary goals, resolves
differences that arise as the budget is prepared, approves the final budget, and monitors the actual
performance of the organisation as the year unfolds.
Na Budget Director: the person responsible for directing and coordinating the organisation’s overall
budgeting process.

Major Components of the Master Budget
W Operating Budgets: describe the income-generating activities of a firm: sales, production, and
finished goods inventories. The ultimate outcome of the operating budgets is a pro forma or
budgeted income statement.
A Financial Budget: detail the inflows and outflows of cash and the overall financial position. Planned
cash inflows and outflows appear in the cash budget. The expected financial position at the end of
the budget period is shown in a budgeted, or pro forma, balance sheet.

The benefits of buying summaries with Stuvia:

Guaranteed quality through customer reviews

Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.

Quick and easy check-out

You can quickly pay through EFT, credit card or Stuvia-credit for the summaries. There is no membership needed.

Focus on what matters

Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!

Frequently asked questions

What do I get when I buy this document?

You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.

Satisfaction guarantee: how does it work?

Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.