ECONOMICS
BUDGETING
|
Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
|
|
|
expected future net income.
|
|
|
past performance.
|
|
|
to motivate the sales force.
|
|
|
a clean slate, with no expectations.
|
Detailed explanation-1: -Answer and Explanation: A common starting point in the budgeting process is b. past performance. Once the manager understands past trends, different forecasting methods can be used to predict future trends.
Detailed explanation-2: -The budgeting process usually begins with a sales budget. The sales budget reflects forecasted sales volume and is influenced by previous sales patterns, current and expected economic conditions, activities of competitors, and so forth.
Detailed explanation-3: -Which of the following is the most common starting point in the information gathering process for budgeting? production budget.
Detailed explanation-4: -Most companies will start with a master budget, which is a projection for the overall company. Master budgets typically forecast the entire fiscal year. The master budget will include projections for items on the income statement, the balance sheet, and the cash flow statement.
Detailed explanation-5: -Incremental Budgeting This is one of the most common budgeting techniques. It takes the previous period’s actual numbers and adds or subtracts a percentage to generate the current budget. It’s a straightforward approach that you should use when your primary income sources and expenses are similar from year to year.