MANAGERIAL ACCOUNTING F/MGRS.
MANAGERIAL ACCOUNTING F/MGRS.
6th Edition
ISBN: 9781264100590
Author: Noreen
Publisher: RENT MCG
Question
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Chapter 9, Problem 9.1Q
To determine

Concept introduction:

A budget is a financial plan for a future period. The budget is prepared usually for a financial year. Budgets can be prepared for revenue and expenses. Budgets help the company to plan for future income and expenses and evaluate business performance.

To indicate: the meaning of a static planning budget.

Expert Solution & Answer
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Explanation of Solution

A budget is a financial plan for a future period. Budgets are prepared by an organization to plan for future income and expenses in advance.

Budgets can be divided into two basic categories; static budget and flexible budget.

  1. A static budget is prepared for a fixed volume of sales and the values of the static budget do not change with the change in volume of sales.
  2. On the other hand, a flexible budget is prepared at different levels of sales and the values of the flexible budget change with the change in the level of sales.

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