Chapter 7 Managerial Accounting

Capital Budget-a budget that details the planned expenditures for facilities, equipment, new products, and other long-term investments.

Cash Budget-a statement of planned cash receipts and disbursements.

Continuous Budget (Rolling Budget)-a common form of master budget that adds a month in the future as the month just ended is dropped.

Financial Budget-the part of a master budget that focuses on the effects that the operating budget and other plans (such as capital budgets and repayments of debt) will have on cash.

Financial Planning Model-mathematical models of the master budget that can react to any set of assumptions about sales, costs, or product mix.

Long-Range Planning-producing forecasted financial statements for five-to ten-year periods.

Master Budget-a budget that summarizes the planned activities of all subunits of an organization.

Operating Budget (Profit Plan)-a major part of a master budget that focuses on the income statement and it’s supporting schedules.

Participative Budgeting-budget formulated with the active participation of all affected employees.

Sales Budget-the result of decisions to create conditions that will generate a desired level of sales.

Sales Forecast-a prediction of sales under a given set of conditions.

Sensitivity Analysis-in budgeting the systematic varying of budget data input to determine the effects of each change on the budget.

Strategic Plan-a plan that sets the overall goals and objectives of the organization.