ACCT Exam 3 Vocab Terms

Budget

A financial plan

Participative Budget

A budget where those individuals who are directly impacted by the budget are involved in the development of the budget

Budgetary Slack

An intentional understatement of expected revenues or overstatement of expected expenses

“Spend it or lose it”

Spending up to the budgeted amount, not for any business reason, but instead to ensure next year’s budget is not cut

Modification Budget

Uses the previous year’s results and modifying for expected changes

Zero-Based Budget

All revenues and expenses must be justified. The previous year’s actual results are ignored

Static Budget

A budget prepared for only one level of sales volume

Flexible Budget

A budget prepared for various levels of sales volume