ACCT 2102: UGA, Farmer- Chapter 11
Conceptual | Latest Update | 2024/2025 |
Rated A+
What is the purpose of a budget?
The purpose of a budget is to provide a financial plan that helps an organization allocate
resources effectively and control expenses.
Define "variance analysis."
Var...
ACCT 2102: UGA, Farmer- Chapter 11
Conceptual | Latest Update | 2024/2025 |
Rated A+
What is the purpose of a budget?
✔✔ The purpose of a budget is to provide a financial plan that helps an organization allocate
resources effectively and control expenses.
Define "variance analysis."
✔✔ Variance analysis is the process of comparing actual financial performance to budgeted
performance to identify discrepancies and understand their causes.
What is a flexible budget?
✔✔ A flexible budget adjusts budgeted revenues and expenses based on actual activity levels,
allowing for more accurate performance evaluation.
Explain the concept of "direct costs."
✔✔ Direct costs are expenses that can be directly traced to a specific product, department, or
project.
1
, What are indirect costs?
✔✔ Indirect costs are expenses that cannot be directly linked to a specific cost object and are
typically allocated across multiple departments.
What is the significance of a performance report?
✔✔ A performance report summarizes actual financial results compared to budgeted figures,
helping management assess efficiency and effectiveness.
Define "cost centers."
✔✔ Cost centers are departments or units within an organization that are responsible for
controlling costs but do not directly generate revenue.
What is a profit center?
✔✔ A profit center is a segment of an organization responsible for generating revenue and
managing its own costs, allowing for profitability analysis.
What does "return on investment" (ROI) measure?
✔✔ Return on investment (ROI) measures the profitability of an investment relative to its cost,
helping evaluate the efficiency of resource allocation.
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