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Financial Terms | |
Budget |
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Definition of BudgetBudgetA detailed schedule of financial activity, such as an advertising budget, a sales budget, or a capital budget. budgeta financial plan for the future based on a single level BudgetA plan expressed in monetary terms covering a future period of time and based on a defined BudgetA set of interlinked plans that quantitatively describe a company’s projected
Related Terms:Activity-based budgetingA method of budgeting that develops budgets based on expected activities and cost drivers – see also activity-based costing. activity-based budgeting (ABB)planning approach applying activity drivers to estimate the levels and costs of activities necessary to provide the budgeted quantity and Balanced-Budget MultiplierThe multiplier associated with a change in government spending financed by an equal change in taxes. Budget cycleThe annual period over which budgets are prepared. ![]() Budget deficitThe amount by which government spending exceeds government revenues. Budget DeficitThe excess of government spending over tax receipts. budget manuala detailed set of documents that provides information budget slackan intentional underestimation of revenues budget variancethe difference between total actual overhead Budgetary controlThe process of ensuring that actual financial results are in line with targets – see variance budgeted costa planned expenditure budgetingthe process of formalizing plans and committing Capital budgetA firm's set of planned capital expenditures. capital budgetmanagement’s plan for investments in longterm capital budgetList of planned investment projects. Capital budgetingThe process of choosing the firm's long-term capital assets. capital budgetingRefers generally to analysis procedures for ranking Capital BudgetingThe process of ranking and selecting investment alternatives and capital budgetinga process of evaluating an entity’s proposed Capital budgetingThe series of steps one follows when justifying the decision to purchase capital budgeting decisionDecision as to which real assets the firm should acquire. Cash budgetA forecasted summary of a firm's expected cash inflows and cash outflows as well as its Consolidated Omnibus Budget Reconciliation Act (COBRA)A federal Act continuous budgetinga process in which there is a rolling financial budgeta plan that aggregates monetary details Flexible budgetA method of budgetary control that flexes, i.e. adjusts the original budget by applying standard flexible budgeta presentation of multiple budgets that imposed budgeta budget developed by top management Incremental budgetA budget that takes the previous year as a base and adds (or deducts) a percentage to arrive at master budgetthe comprehensive set of all budgetary schedules operating budgeta budget expressed in both units and dollars participatory budgeta budget that has been developed Planning, programming and budgeting system (PPBS)A method of budgeting in which budgets are allocated to projects or programmes rather than to responsibility centres. Priority-based budgetA budget that allocates funds in line with strategies. program budgetingan approach to budgeting that relates rolling budgetsee continuous budgeting Rolling budgetsA method of budgeting in which as each month passes, an additional budget month is added such that there is always a 12-month budget. zero-base budgetinga comprehensive budgeting process Zero-based budgetingA method of budgeting that ignores historical budgetary allocations and identifies the costs that are necessary to implement agreed strategies. Aggregate planningA budgeting process using summary-level information to appropriationa budgeted maximum allowable expenditure Capital rationingPlacing one or more limits on the amount of new investment undertaken by a firm, either cash flowthe receipt or disbursement of cash; when related controllable variancethe budget variance of the two variance approach to analyzing overhead variances controllerOfficer responsible for budgeting, accounting, and auditing. Cost of capitalThe required return for a capital budgeting project. Cost of capitalThe blended cost of a company’s currently outstanding debt instruments Cost of CapitalThe discount rate that should be used in the capital budgeting process. DeficitSee budget deficit. DependentAcceptance of a capital budgeting project contingent on the acceptance of another project. Direct estimate methodA method of cash budgeting based on detailed estimates of cash receipts and cash Direct materials mix varianceThe variance between the budgeted and actual mixes of Financial controlThe management of a firm's costs and expenses in order to control them in relation to fixed overhead spending variancethe difference between the total actual fixed overhead and budgeted fixed overhead; ForecastA revised budget estimate or update, part-way through a budget period. Hurdle rateThe required return in capital budgeting. Internal rate of returnThe rate of return at which the present value of a series of future Labor efficiency varianceThe difference between the amount of time that was budgeted margin of safetythe excess of the budgeted or actual sales Materials price varianceThe difference between the actual and budgeted cost to Materials quantity varianceThe difference between the actual and budgeted quantities Maximum inventoryAn inventory item’s budgeted maximum inventory level, Minimum inventoryAn inventory item’s budgeted minimum inventory level. National DebtThe debt owed by the government as a result of earlier borrowing to finance budget deficits. That part of the debt not held by the central bank is the publically held national debt. operational plana formulation of the details of implementing overhead efficiency variancethe difference between total budgeted overhead at actual hours and total budgeted overhead spending variancethe difference between total actual overhead and total budgeted overhead at actual Payback methodA capital budgeting analysis method that calculates the amount of Post-auditA set of procedures for evaluating a capital budgeting decision after the fact. predetermined overhead ratean estimated constant charge per unit of activity used to assign overhead cost to production or services of the period; it is calculated by dividing total budgeted annual overhead at a selected level of volume or activity by that selected measure of volume or activity; it is also the standard overhead application rate Production yield varianceThe difference between the actual and budgeted proportions ProfilingA method of budgeting that takes into account seasonal fluctuations and estimates of when revenues will be earned and costs will be incurred over each month in the budget period. Relevant rangeThe upper and lower levels of activity within which the business expects to be operating within the short-term planning horizon (the budget period). revenue centera responsibility center for which a manager is accountable only for the generation of revenues and has no control over setting selling prices, or budgeting or incurring costs Salvage ValueThe value of a capital asset at end of a specified period. It is the current market price of an asset being considered for replacement in capital budgeting. Selling price varianceThe difference between the actual and budgeted selling price for standarda model or budget against which actual results are standard costa budgeted or estimated cost to manufacture Standard costsA budget cost for materials and labour used for decision-making, usually expressed as a per unit cost that is applied to standard quantities from a bill of materials and to standard times from a Statement-of-cash-flows methodA method of cash budgeting that is organized along the lines of the statement of cash flows. Structural DeficitThe budget deficit in excess of the deficit that in the long run keeps constant the ratio of the publically held national debt to GDP. Twin DeficitsThe trade deficit and the government budget deficit. Variable costA cost that changes in amount in relation to changes in a related activity. variable overhead efficiency variancethe difference between budgeted variable overhead based on actual input activity and variable overhead applied to production variable overhead spending variancethe difference between total actual variable overhead and the budgeted amount of variable overhead based on actual input activity variancea difference between an actual and a standard or Variance analysisA method of budgetary control that compares actual performance against plan, investigates the causes of the variance and takes corrective action to ensure that targets are achieved. volume variancea fixed overhead variance that represents Related to : financial, finance, business, accounting, payroll, inventory, investment, money, inventory control, stock trading, financial advisor, tax advisor, credit. |