Chapter 7
Profit Planning
McGraw-Hill /Irwin © The McGraw-Hill Companies, Inc., 2007
, Learning Objective
LO1
To understand why
organizations budget
and the processes
they use to create
budgets.
7-2
, The Basic Framework of Budgeting
A budget is a detailed quantitative plan for
acquiring and using financial and other resources
over a specified forthcoming time period.
1. The act of preparing a budget is called
budgeting.
2. The use of budgets to control an
organization’s activity is known as
budgetary control.
7-3
, Planning and Control
Planning – Control –
involves developing involves the steps
objectives and taken by
preparing various management that
budgets to achieve attempt to ensure the
these objectives. objectives are
attained.
7-4
Profit Planning
McGraw-Hill /Irwin © The McGraw-Hill Companies, Inc., 2007
, Learning Objective
LO1
To understand why
organizations budget
and the processes
they use to create
budgets.
7-2
, The Basic Framework of Budgeting
A budget is a detailed quantitative plan for
acquiring and using financial and other resources
over a specified forthcoming time period.
1. The act of preparing a budget is called
budgeting.
2. The use of budgets to control an
organization’s activity is known as
budgetary control.
7-3
, Planning and Control
Planning – Control –
involves developing involves the steps
objectives and taken by
preparing various management that
budgets to achieve attempt to ensure the
these objectives. objectives are
attained.
7-4
