A summary of the course 'Financial Management Accounting' in quarter 4 of the study programme 'International Business and Management Studies' at Avans Hogeschool. The used book is 'Charles T. Horngren - Introduction to management accounting'.
Budgets provide a comprehensive financial overview that helps coordinate financial and operational
activities.
Budgets goals and objectives
Benefits of budgets:
1. Budgeting compels managers to think ahead by formalizing their responsibilities for planning.
2. Budgeting provides an opportunity for managers to reevaluate existing activities and evaluate
possible new activities.
3. Budgeting aids managers in communicating objectives and coordinating actions across the
organization.
4. Budgeting provides benchmarks to evaluate subsequent performance.
Problems that can limit the advantages of budgeting:
Low levels of participation in the budget process and (due to that) a lack of acceptance of
responsibility for the final budget.
Incentives to lie and cheat in the budget process.
Difficulties in obtaining accurate sales forecasts.
Management should seek to create an environment where there is a true two-way flow of
information. The main factors affecting budget acceptance are the: (human relations problems)
1. perceived attitude of top management
2. level of participation in the budget process
3. degree of alignment between the budget and other performance goals
Potential problems in implementing budgets:
Budgets created with the active participation of all affected employees—called participative
budgeting—are generally more effective than budgets imposed on subordinates.
Misalignment between the performance goals stressed in budgets versus the performance measures
the company uses to reward employees and managers can also limit the advantages of budgeting.
Dysfunctional incentives: lead managers to make poor decisions
Low levels of participation in the budget process and lack of acceptance of responsibility for
the final budget
Lying can arise if the budget process creates incentives to bias the budget information.
Budgetary Slack (budget padding) is the overstatement of budgeted costs (or
understatement of budgeted revenue) to create a goal that is easier to achieve.
A sales forecast is a prediction of sales under a given set of conditions. Sales forecasts are usually
prepared under the direction of the top sales executive.
The sales budget is the specific sales forecast that is the result of decisions to create the conditions
that will generate a desired level of sales.
Factors to Consider When Forecasting Sales:
1. Past patterns of sales Past experience combined with detailed past sales by product line,
geographic region, and type of customer can help predict future sales.
2. Estimates made by the sales force A company’s sales force is often the best source of
information about the desires and plans of customers.
Voordelen van het kopen van samenvattingen bij Stuvia op een rij:
Verzekerd van kwaliteit door reviews
Stuvia-klanten hebben meer dan 700.000 samenvattingen beoordeeld. Zo weet je zeker dat je de beste documenten koopt!
Snel en makkelijk kopen
Je betaalt supersnel en eenmalig met iDeal, creditcard of Stuvia-tegoed voor de samenvatting. Zonder lidmaatschap.
Focus op de essentie
Samenvattingen worden geschreven voor en door anderen. Daarom zijn de samenvattingen altijd betrouwbaar en actueel. Zo kom je snel tot de kern!
Veelgestelde vragen
Wat krijg ik als ik dit document koop?
Je krijgt een PDF, die direct beschikbaar is na je aankoop. Het gekochte document is altijd, overal en oneindig toegankelijk via je profiel.
Tevredenheidsgarantie: hoe werkt dat?
Onze tevredenheidsgarantie zorgt ervoor dat je altijd een studiedocument vindt dat goed bij je past. Je vult een formulier in en onze klantenservice regelt de rest.
Van wie koop ik deze samenvatting?
Stuvia is een marktplaats, je koop dit document dus niet van ons, maar van verkoper ninangkotta. Stuvia faciliteert de betaling aan de verkoper.
Zit ik meteen vast aan een abonnement?
Nee, je koopt alleen deze samenvatting voor €4,49. Je zit daarna nergens aan vast.
