Chapter 30, Budgets and variance Flashcards Preview

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Flashcards in Chapter 30, Budgets and variance Deck (8):
1

Reasons for budgeting

- measuring money entering and leaving the business
- giving information on the productivity levels of the business
- providing information for shareholders
- ensuring cash flow is adequate to meet day to day needs
- strategic perspective

2

Overdraft facility

an agreement with the bank to be able to withdraw from an account up to a stated limit

3

reasons for Cashflow information

- need for liquidity
- improving liquidity
- Dealing with banks or other lenders
- Making changes

4

Delegation

the passing on of responsibility, usually to someone at a lower level in the organisation

5

Zero Budgeting

sets all budgets at zero and requires managers to justify any requirements for funds. This ensures money is only used where there is need

6

Flexible Budgets

allows a business to make allowances for changes in the level of sales volume so that adverse variances are avoided

7

Variance Analysis

the difference between the actual financial results for an item and the amount in the budget. Variance can be adverse or favourable.

8

Historic information

information that already exists from past years