Financial and Managerial Accounting

Chapter 23 Budgetary Planning

Learning Objectives

After studying this chapter, you should be able to:

1. Indicate the benefits of budgeting.
2. State the essentials of effective budgeting.
3. Identify the budgets that comprise the master budget.
4. Describe the sources for preparing the budgeted income statement.
5. Explain the principal sections of a cash budget.
6. Indicate the applicability of budgeting in nonmanufacturing companies.

Feature Story

Was This the Next Amazon.com? Not Quite

So you came up with a great idea for a product. You started a company, and you are selling stuff so fast that you can barely keep up. No problem, right? However, without proper planning and budgeting, your success could be short-lived. In some cases, failure is actually brought on by rapid, uncontrolled growth.

One such example was online discount bookseller, www.Positively-You.com. One of the website's co-founders, Lyle Bowline, had never run a business. However, his experience as an assistant director of an entrepreneurial center had provided him with knowledge about the do's and don'ts of small business. To minimize costs, he started the company small and simple. He invested $5,000 in computer equipment and ...