6. What are the organizational functions
of budgets?
1. Budgets as a planning process
2. Budgets as a priority setting process
3. Budgets as a resource allocation process
4. Budgets as a responsibility allocating
process
5. Budgets as an evaluation process
7. Uses of Budgets
Budgets can be useful
To provide overview
To help allocate resources
To determine leverage points
In financial control
9. For-profit enterprises
1. Two flavors of money: revenue and
investment.
2. Budgets do not allocate "money," but allocate
revenue projections.
3. Quarterly review of revenue vs. projections,
continuous evaluation and problem solving.
4. Performance against the budget determines
rewards.
11. Technology budgeting
1. Startup: Defining the product
Differentiating brand
2. For-profit: Controlling/reducing costs
Analysis of what’s going on
New products
3. Agency & n-p: Improving service
Controlling/reducing costs
w/o reducing staff
12. Planning horizon: motivation
1. Startup: differentiating brand
creating market
2. For-profit: controlling costs and
maximizing profit for
shareholders
3. Agency & n-p: Quality of service, as
defined by professionals, not
customers
14. D. The Role of Accounting
Provide useful information to
Owners
Managers
Potential investors
Regulators
15. What would be in the introductory parts
of a financial management course
• Background/Objectives
• Key Financial Accounting
Concepts
• The Financial Statements
• Interpretation and Analysis
16. What Are We Talking About?
What do accountants do? How do they do it?
Who cares about what they do and how it’s done?
• Financial Accounting
– Preparation of financial
statements
– Audit
– Control
• Managerial (or Cost) Accounting
– Budgets and variances
– Analysis for management
decisions
– Cost and profitability
assessment
