Aqa Accounting- Further Aspects Of Budgeting

Front 1

Define budgetary control.

Back 1

Budgetary control is the process of using budgets to monitor actual results against budgeted figures.

Front 2

What are seven benefits of budgetary control?

Back 2

1. Planning.
2. Co-ordination.
3. Control.
4. Communication.
5. Motivation.
6. Evaluation of performance.
7. Decision-making.

Front 3

What are six limitations of budgetary control?

Back 3

1. Costs and benefits.
2. Accuracy.
3. Demotivate staff.
4. Dysfunctional management.
5. Set too easy.
6. May restrict activities.

Front 4

What is budget?

Back 4

A budget is a financial plan for a business, prepared in advance and generally covering a period of up to 12 months.

Front 5

Define a sales budget.

Back 5

A sales budget is used to estimate sales in units and revenue.

Front 6

Define a production budget.

Back 6

A production budget shows the level of production in units needed to meet the demand for expected sales and identifies any production problems that may need to be resolved.

Front 7

Define a purchases budget.

Back 7

A purchases budget shows the number and value of the goods that need to be bought in order to meet he demands of the production department.

Front 8

Define a labour budget.

Back 8

A labour budget is used to plan and control the labour hours and labour costs of production-line employees.

Front 9

Define a debtor budget.

Back 9

A debtor budget is used to estimate the timing and amount of receipts from debtors.

Front 10

Define a creditor budget.

Back 10

A creditor budget is used to estimate the timing and amount of payments to creditors.

Front 11

Define a cash budget.

Back 11

A cash budget details the forecast cash/bank receipts and payments, usually on a month-by-month basis, for the next three, six or twelve month, in order to show the forecast bank balance at the end of each month throughout the budget period.

Front 12

Define a master budget.

Back 12

A master budget takes the form of a forecast operating statement - forecasting trading and profit and loss account - and a forecast balance sheet.

Front 13

What are four benefits of a master budget?

Back 13

1. The forecast profit can be calculate and compared with the actual profit the previous year.
2. The forecast profit shows the effect of changes in the selling price of products, the volume of units sold, the buying price and in overhead expenses.
3. Management can take action by reviewing their selling prices, volume of sales, buying prices and overhead expenses.
4. The actual profit figures for the year can be compared with the forecast profits, and any differences can be investigated.

Front 14

What is the difference between cash and profit?

Back 14

Cash is physical notes and coins or money in the bank whereas profit is a calculated amount being the difference between revenue received and
receivable and expenditure paid and payable.