Key Terms
- budget
- quantitative plan estimating when and how much cash or other resources will be received and how the cash or other resources will be used
- budgeted balance sheet
- estimated assets, liabilities, and equities that the company would have at the end of the year if their performance were to meet its expectations
- budgeted income statement
- statement similar to a traditional income statement except it contains budgeted data
- capital asset budget
- budget showing the organization’s plans to invest in long-term assets
- cash budget
- combined budget of all cash inflows and outflows of the organization
- cash collections schedule
- schedule showing when cash will be received from customers
- cash payments schedule
- schedule showing when cash will be used to pay for direct material purchases
- direct labor budget
- budget based on the production budget used to ensure the proper amount of staff is available for production and that there is money available to pay for the labor
- direct materials budget
- budget combining the production budget with the direct material per unit to ensure the proper quantity of direct materials is available when needed for production
- financial budget
- category of budgeting that details estimates for cash inflows and outflows through planned operations and changes capital investments of assets, liabilities, and equities
- flexible budget
- budget based on different levels of activity
- manufacturing overhead budget
- budget including the remainder of the production costs not covered by the direct materials and direct labor budgets
- master budget
- overall budget that includes the operating and financial budgets
- operating budget
- category of budgeting that helps managers plan and manage production, order materials, schedule direct labor, and monitor overhead expenses
- production budget
- budget showing the number of units that need to be produced for each period based on sales estimates and required inventory levels
- rolling budget
- budget that is continuously updated by adding an additional budget period at the end of the current budget period
- sales budget
- budget showing the expected sales in units and the sales price for the budget period
- selling and administrative expense budget
- budget showing the variable and fixed expenses estimated to be incurred in all areas other than production
- static budget
- budget prepared for a single level of activity for a given period
- zero-based budgeting
- budget that begins with zero dollars and then includes in the budget only revenue and expenses that can be supported or justified