Budgets (Edexcel A-Level Business): Flashcards
📚Flashcards
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10 cards from this deck
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Practise the cards
10 cards from this deck
Budget definition
Budget definition
A quantified financial plan prepared and agreed in advance
Budget vs forecast
Budget vs forecast
Budget sets targets; forecast predicts what might happen
Budget purpose: control & monitoring
Budget purpose: control & monitoring
Sets targets; measures actual vs plan; takes corrective action
Zero-based budgeting (ZBB)
Zero-based budgeting (ZBB)
Allocates no money unless spending can be justified
Variance
Variance
Difference between budgeted and actual figures
Favourable variance (F)
Favourable variance (F)
When actual figures are better than budget
Adverse variance (A)
Adverse variance (A)
When actual figures are worse than budget
Budgetary control
Budgetary control
Using budgets to plan, compare actuals, investigate differences
Sales revenue budget
Sales revenue budget
Combines sales volume with prices to calculate expected revenue
Budget difficulty: short-termism
Budget difficulty: short-termism
Focus on current budgets may undermine long-term performance