BRYAN T.

LLUISMA ACCTG16B
BSA-4 SAT 6-9PM

1. What is a Budget?
A budget is a financial plan of the resources needed to carry out tasks and meet
financial goals. It is also a quantitative expression of the goals the organization
wishes to achieve and the cost of attaining these goals.

The act of preparing a budget is call budgeting. The use of budgets to control a
firm’s activities is known as budgetary control.

2. What are the purposes of a Budget?

1. Defining broad objectives and goals and formulating strategies to achieve
such objectives
2. Coordinating the activities of the organization by integrating the plans of the
various parts thereby pulling every one in the same direction
3. Allocating resources to those parts of the organization where they can be
used most effectively
4. Communicating management’s approved plans throughout the organization
5. Uncovering and preparing for potentials bottleneck in the operations before
they occur
6. Motivating managers to achieve the desired results
7. Setting a standard or benchmark for evaluating actual performance

3. What are the different types of Budgets?

A. The Operating budget
1. Budgeted Income Statement
a. Sales budget
b. Production budget
1.) Materials cost budget
2.) Direct labor cost budget
3.) Factory overhead budget
4.) Inventory Levels
2. Cost of Sales budget
3. Selling and Administrative expenses budget
4. Financial expense budget
B. The Financial budget
1. Budgeted Statement of Financial Position
2. Cash budget
C. The Capital Investment budget