AccountingCode 9706
Budgeting and budgetary control
What this topic asks you to be able to do
- what an organisation gains and loses by running a budgetary control system
- the benefits and drawbacks of using spreadsheets to prepare budgets
- the meaning of a master budget
- how to draw up a budget for each of sales, production, purchases, labour, trade receivables, trade payables and cash, and to draw up the statement of profit or loss and the statement of financial position in budgeted form
- the effect that limiting factors have on budget preparation
- what flexible budgeting offers that fixed budgeting does not
- the method for drawing up a flexible budget statement
- possible causes of differences that arise when actual data is set against flexible budgeted data
- how to draw up a statement that reconciles actual production cost with the production cost shown in the flexible budget
- the way of setting out a statement that reconciles flexible budgeted profit against actual profit
- how to reach business decisions and give recommendations on the basis of supporting data
- how budgeting influences, and is influenced by, people's behaviour, including targets, incentives and motivation
- why non-financial factors matter