Terms and also definitions for budgeting in general and also capital budgeting are likewise included here. Examine it out.

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Budget – A formal created statement that management’s plans for a specified future time period, expressed in financial terms.Static budget – A forecast of spending plan data at one level the activity.Participative budgeting – A budgetary approach that starts through input indigenous lower-level managers and works upward so that managers at all levels participate.Flexible budget – A forecast of budget plan data for assorted levels the activity.Master budget – A collection of interrelated budgets the constitutes a setup of action for a particular time period.Financial budgets – separation, personal, instance budgets that emphasis primarily top top the cash resources essential to fund expected operations and planned funding expenditures.Operating budgets – individual budgets that an outcome in a budgeted earnings statement.Budgeted revenue statement – An calculation of the supposed profitability the operations for the spending plan period.Sales budget – An calculation of meant sales revenue for the budget period.Merchandise purchases budget – The estimated cost of goods to be purchased through a merchandiser to accomplish expected sales.Production budget – A estimate of the devices that must be produced to satisfy anticipated sales.Direct materials budget – An estimate of the quantity and also cost of direct materials to be purchased.Direct job budget – A forecast of the quantity and cost of straight labor vital to meet production requirements.Manufacturing overhead budget – An estimate of expected manufacturing overhead costs for the budget plan period.Selling and also administrative cost budget – A projection of anticipated selling and administrative prices for the budget period.Budgeted balance sheet – A projection of financial place at the end of the budget plan period.Cash budget – A projection of guess cash flows.Sales forecast – The forecast of potential sales for the industry and the company’s supposed share of together sales.Budget committee – A team responsible because that coordinating the preparation of the budget.Budgetary control – The use of budgets to control operations.Budgetary slack – The amount by which a manager intentionally underestimates budgeted earnings or overestimates budgeted expenses in stimulate to do it simpler to accomplish budgetary goals.Long-range planning – A formalized process of choosing strategies to accomplish long-term goals and developing policies and also plans to implement the strategies.

Capital Budgeting Terms and Definitions

Capital budgeting – The process of making capital expenditure decision in business.Cost the capital – The price of return that management expects to pay on every borrowed and also equity funds.Annual rate of return technique – determines the profit of a funding expenditure by separating expected yearly net revenue by the average investment.Cash payback technique – identifies the time period required to recover the cost of a resources investment indigenous the net yearly cash flow created by the investment.Discounted cash flow technique – Considers both the estimated full net cash flows from the investment and also the time worth of money.Discount rate – attention rate offered in discounting the future net cash flows.Incremental evaluation – The process of identify the gaue won data that adjust under different courses the action.Internal price of return (IRR) – The rate that will cause the current value that the proposed capital expenditure to equal the existing value that the intended net yearly cash flows.Internal price of return method – finds the interest yield of the potential investment.
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