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Budgetary Process (Budgetary Preparation Process (Step 1 (Budget manual…
Budgetary Process
Budgetary Preparation Process
Step 1
Budget manual
responsibility of persons and procedures, forms and records, meeting records of BUDGET LAUNCH CONFERENCE
Budget committee
Co-ordination;
Issuing of timetables for the preparation of functional budgets;
Allocation the responsibilities for the preparation of functional budgets;
Provision of information to assist in the preparation of budgets;
Communication of final budgets to the appropriate managers;
Continuous assessment of the budgeting and planning process
Budget period
Step 2
Determine the factor that restricts output
Principal / key / limiting budget factor
sales demand (most organisations)
Step 3
Preparation of the sales budget
Step 4
Initial preparation of budgets
Step 5
Negotiation of budgets with supervisors
Step 6
Co-ordination
Step 7
Final acceptance of the budget
Master budget
Budgeted statement of P/L
Budgeted statement of financial position
Cash budget
Step 8
Budget review
Cash Budget
Net profit
Matching concept
账面上货品卖出就算收入，不需实际到手
Profit + depreciation = Net cash flow
Cash in
= sales + opening receivables - closing receivables
Cash out
= purchases + opening payables - closing payables
Purchase
= cost of sales + closing inventory - opening inventory
Behavioral Implication of Budgeting
Top-down / imposed budget
Suitable when
very small businesses
during economic hardship
when operational managers lack budgeting skills
precise coordination
newly-formed organizations
Bottom-up / participatory budget
Budgetary slack / budget padding
Negotiated budget
How difficult should target be?
Expectations bugdet
Aspirations budget
Functional Budgets
(Departmental budgets)
Opening inventory + production - sales
= closing inventory
Opening inventory + material purchases - material used in production = closing inventory