Budgets (1) Flashcards
What is a budget?
A quantified plan of action for a forthcoming accounting period
What is a forecast?
An estimate of what is likely to occur in the future
What are plans?
Set the targets
Characteristics of control?
Measure actual results against plan
Take action to adjust actual performance to achieve the plan or to change plan altogehter
Is constril possible without planning?
No
What is the essence of control?
The measurement of results and comparing them with the original plan
When there’s deviation from the plan?
Control action is required to make the results conform
What is feedback?
When the results of a system are used to control it, by adjusting the input or behaviour of the system
What is negative feedback?
Indicates results or activities must be brought back on course, as they are deviating from the plan
What is positive feedback?
Control action continuing the current course
What is feedforward control based on?
Forecast results. If forecast is bad, control action is taken well in advance of actual results
What is single loop feedback?
Regulates the output of a system. The plan or target itself is not changed, even though resources needed to achieve it might have to be reviewed
What is double loop feedback?
Info used to change the plan itself
Features of strategic performance reports (produced)
Produced periodically
Features of strategic performance reports (strategic)
Compare strategic position vs overall business plan
