9/24/22, 7:55 PM Chapter 9: The Master Budget Flashcards | Quizlet

Chapter 9: The Master Budget Upgrade Study

Chapter 9: The Master Budget

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Textbook solutions for this set

Intermediate Accounting
14th Edition
Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield

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Terms in this set (17)

setting long-term goals that may extend 5-10 years

into the future. Often created to reflect expectations
Strategic Planning
for these long term goals (first step to getting the
company back on track)

1. Develop Strategy

2. Plan

Budgets are used for... 3. Act

4. Control

and then give feedback to identify corrective action

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9/24/22, 7:55 PM Chapter 9: The Master Budget Flashcards | Quizlet

Chapter 9: The Master Budget

a budget that is continuously updated so that the
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next 12 months of operations are always budgeted;
Rolling Budget
also known as a continuous budget

committee comprised of upper management as well

Budget Committee as cross functional managers that reviews, revises,
and approves the final budget.

Collect on Delivery, or Cash on a sales term indicating that the inventory must be
Delivery (COD) paid for at the time of delivery

A merchandiser's budget that computes the cost of

Cost of Goods Sold, Inventory,
goods sold, the amount of desired ending inventory,
and Purchases Budget
and amount of merchandise to be purchased

include the capital expenditures budget and the cash

Financial Budgets
budgets. Culminates in a budgeted balance sheet

Flexible Budgets Budgets Prepared for different volumes of activity

lending arrangement from a bank in which a

company is allowed to borrow money as needed, up
Line of Credit to a specified maximum amount, yet only pay interest
on the portion that is actually borrowed until it is
repaid.

comprehensive planning document for the entire

Master Budget organization. master budget includes the operating
budgets and financial budgets

budgets needed to run the daily operations of the

Operating Budgets company. Operating budgets culminate in a
budgeted income statement.

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9/24/22, 7:55 PM Chapter 9: The Master Budget Flashcards | Quizlet

Chapter 9: The Master Budget

Participative Budgeting
budgeting that involves the participation of many
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levels of management

extra inventory kept on hand in case demand is

Safety stock higher than expected or problems in the factory slow
production

a what-if technique that asks what a result will be if a

Sensitivity Analysis predicted amount is not achieved or if an underlying
assumption changes

intentionally overstating budgeted expenses or

understating budgeted revenues in order to cope
Slack
with uncertainty, make performance appear better, or
make room for potential budget cuts.

Difference between actual and budgeted figures

Variance
(revenues and expenses)

a budgeting approach in which managers begin with

Zero-Based Budgeting a budget of zero and must justify every dollar put
into the budget.

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