BUS-317 TOPIC 4 DQ 2
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Budgets are developed months before the end of the current year and are best-guess estimates of
future performance. What do you think might be some pitfalls of budgeting, and how can they be
avoided?
These are the ways to avoid some pitfalls of budgeting, and how to avoid them. Overestimating revenue
can result in financial distress and excessive spending. Be cautious when estimating your revenue in
order to prevent this. Underestimating expenses may cause a budget deficit. Always account for inflation
and unforeseen expenses. Lack of Flexibility: It may be difficult to adjust a strict budget to shifting
business circumstances. Set aside money in your budget for unforeseen expenses. Ignoring Market
Trends: Inaccurate budgeting might result from failing to take market trends into account. Keep abreast
of market developments and factor them into your spending plan. Failure to review the budget on a
regular basis may result in budgetary variances. Review your budget frequently and make any required
adjustments.
Warden, C. Jones and Taylor, W. 2023. Financial & Managerial Accounting. 26th ed. Boston, MA:
Cengage. ISBN-13: 9780357714041
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Related Questions
indicate yes if it describes a potential benefit of budgeting orno if it describes a potential negative outcome of budgeting. Budgets are useful in assigning blame for unexpected results.
arrow_forward
Think It Through: Errors in a Budgeted Balance Sheet
E openstax"
Which error has the potential to cause more problems with the
budgeted balance sheet: overstating sales or understating the cash
collected?
arrow_forward
All of the following are necessary for budgets to be effective except
Select one:
a. Employees affected by a budget should be consulted when it is prepared.
b. All budgeted amounts must be spent to ensure that budgets arent reduced for the next period
c Coals should be challenging and attainable
O d Managers must be aware of potential negative outcomes of budgeting. such as budgetary slack
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Label each item below with a “B” if it describes a benefit of budgeting or a “Not B” if it describes a potential negative outcome of budgeting.
arrow_forward
Ethical Considerations. Budget projections always involve a degree of judgment because managers can neverpredict the future with total accuracy. For instance, onemanager with an optimistic view and another with apessimistic view could look at the same set of facts andarrive at distinctly different conclusions about the company’s financial prospects. When budgets will influencedecisions made by investors or lenders, how should thepeople who prepare the budgets deal with the variancebetween optimistic and pessimistic viewpoints? On theone hand, being too pessimistic could result in lowerlevels of funding, which could be detrimental to employees, existing investors, existing creditors, and otherfinancial stakeholders. On the other hand, being toooptimistic could be detrimental to prospective investors or creditors. How do you find the right balance?
arrow_forward
Which of the following statements is false?
Select one:
a. According to responsibility accounting, all managers should be held responsible for all asbects of the master
budget.
o b. Budgets helps uncover potential bottlenecks.
c. Budgeting forces managers to think about and plan for the future.
o d. One benefit of following a well-designed budgeting process is Improved performance evaluations.
e. Budgeted cash collections typically consist of collections on sales made to customers in prior periods plus
collections on sales made in the current budget period.
Which of the following activities would be classified as a batch-level activity?
Select one:
a. none of the given answer.
b. Designing a new product.
c. Milling a part required for the final product.
d. Setting up equipment.
e. Training employees.
arrow_forward
Regarding Budgets, which of the following statements is true?
a. A budget is a business plan for the short term.
O b.
A periodic budget is prepared for a particular period of time.
O c. Budgets are based on forecasts. However, the performance of a manager should be compared to
a target that reflects the actual environment.
O d. All the answers are true.
arrow_forward
Budgeting can be an important management tool if implemented properly. Identify several positive results when budgets are used properly. Since budgets affect people, identify several negative aspects if budgets are not implemented properly. Additionally, please discuss in detail how the budgeting process is essential to managers.
arrow_forward
Which of the following statements about budgeting is incorrect?
a. Budgets provide direction and coordination
b. Budgets motivate staff
c. A budget is a financial plan.
d. A budget looks back and review performance.
arrow_forward
“Budgets are the best management tool, but I think they can cause arguments and disagreements between different budget holder.” According to this quote, discuss in detail the possible advantages of budgeting.
arrow_forward
The budget process and budgets themselves can impact management actions, both positively and negatively. For instance, a common practice among not-for-profit organizations and government agencies is for management to spend any amounts remaining in a budget at the end of the budget period, a practice often called “use it or lose it.” The view is that if a department manager does not spend the budgeted amount, top management will reduce next year’s budget by the amount not spent. To avoid losing budget dollars, department managers often spend all budgeted amounts regardless of the value added to products or services. All of us pay for the costs associated with this budget system. Required Write a half-page report to a local not-for-profit organization or government agency offering a solution to the “use it or lose it” budgeting problem.
arrow_forward
Budget slack is the situation in which
a. there is an intentional overstatement of expenses.
b. there is an intentional overstatement of revenues.
c. the company is ahead of schedule in preparing the budget.
d. sales are slow during certain budget periods.
arrow_forward
Which statement about the cash budget is correct?
It is also called the statement of cash flows.
It can show managers when the company will experience a net loss.
It can indicate when sales are insufficient.
It can show managers when additional financing will be necessary.
arrow_forward
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Related Questions
- indicate yes if it describes a potential benefit of budgeting orno if it describes a potential negative outcome of budgeting. Budgets are useful in assigning blame for unexpected results.arrow_forwardThink It Through: Errors in a Budgeted Balance Sheet E openstax" Which error has the potential to cause more problems with the budgeted balance sheet: overstating sales or understating the cash collected?arrow_forwardAll of the following are necessary for budgets to be effective except Select one: a. Employees affected by a budget should be consulted when it is prepared. b. All budgeted amounts must be spent to ensure that budgets arent reduced for the next period c Coals should be challenging and attainable O d Managers must be aware of potential negative outcomes of budgeting. such as budgetary slackarrow_forward
- Label each item below with a “B” if it describes a benefit of budgeting or a “Not B” if it describes a potential negative outcome of budgeting.arrow_forwardEthical Considerations. Budget projections always involve a degree of judgment because managers can neverpredict the future with total accuracy. For instance, onemanager with an optimistic view and another with apessimistic view could look at the same set of facts andarrive at distinctly different conclusions about the company’s financial prospects. When budgets will influencedecisions made by investors or lenders, how should thepeople who prepare the budgets deal with the variancebetween optimistic and pessimistic viewpoints? On theone hand, being too pessimistic could result in lowerlevels of funding, which could be detrimental to employees, existing investors, existing creditors, and otherfinancial stakeholders. On the other hand, being toooptimistic could be detrimental to prospective investors or creditors. How do you find the right balance?arrow_forwardWhich of the following statements is false? Select one: a. According to responsibility accounting, all managers should be held responsible for all asbects of the master budget. o b. Budgets helps uncover potential bottlenecks. c. Budgeting forces managers to think about and plan for the future. o d. One benefit of following a well-designed budgeting process is Improved performance evaluations. e. Budgeted cash collections typically consist of collections on sales made to customers in prior periods plus collections on sales made in the current budget period. Which of the following activities would be classified as a batch-level activity? Select one: a. none of the given answer. b. Designing a new product. c. Milling a part required for the final product. d. Setting up equipment. e. Training employees.arrow_forward
- Regarding Budgets, which of the following statements is true? a. A budget is a business plan for the short term. O b. A periodic budget is prepared for a particular period of time. O c. Budgets are based on forecasts. However, the performance of a manager should be compared to a target that reflects the actual environment. O d. All the answers are true.arrow_forwardBudgeting can be an important management tool if implemented properly. Identify several positive results when budgets are used properly. Since budgets affect people, identify several negative aspects if budgets are not implemented properly. Additionally, please discuss in detail how the budgeting process is essential to managers.arrow_forwardWhich of the following statements about budgeting is incorrect? a. Budgets provide direction and coordination b. Budgets motivate staff c. A budget is a financial plan. d. A budget looks back and review performance.arrow_forward
- “Budgets are the best management tool, but I think they can cause arguments and disagreements between different budget holder.” According to this quote, discuss in detail the possible advantages of budgeting.arrow_forwardThe budget process and budgets themselves can impact management actions, both positively and negatively. For instance, a common practice among not-for-profit organizations and government agencies is for management to spend any amounts remaining in a budget at the end of the budget period, a practice often called “use it or lose it.” The view is that if a department manager does not spend the budgeted amount, top management will reduce next year’s budget by the amount not spent. To avoid losing budget dollars, department managers often spend all budgeted amounts regardless of the value added to products or services. All of us pay for the costs associated with this budget system. Required Write a half-page report to a local not-for-profit organization or government agency offering a solution to the “use it or lose it” budgeting problem.arrow_forwardBudget slack is the situation in which a. there is an intentional overstatement of expenses. b. there is an intentional overstatement of revenues. c. the company is ahead of schedule in preparing the budget. d. sales are slow during certain budget periods.arrow_forward
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- Managerial AccountingAccountingISBN:9781337912020Author:Carl Warren, Ph.d. Cma William B. TaylerPublisher:South-Western College Pub

Managerial Accounting
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ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:South-Western College Pub