Write short notes on the following: (20 Marks)
Outstanding expense is a personal account and is shown on the liability side of a balance sheet.
The master budget is a one-year budget planning document for the firm encompassing all other budgets. It coincides with the fiscal year of the firm and may be broken down into quarters and, further, into months. If the firm plans for the master budget to be an ongoing document, rolling from year to year, then normally a month is added to the end of the budget to facilitate planning. This is called continuous budgeting.
The budget committee usually develops the master budget for each year, guided by the Budget Director, who is usually the Controller of the company.
a) Outstanding Expenses---------------------------------------------
b) Master Budget
c) Dividend Policy
d) Trading and Profit and Loss
a) Outstanding Expenses
Outstanding expenses are those expenses which have been incurred and consumed during an accounting period and are due to be paid, but are not paid. Examples include outstanding salary, outstanding rent, etc. Outstanding expenses are recorded in the books at the end of an accounting period to show true numbers of a business.
Outstanding expense is a personal account and is shown on the liability side of a balance sheet.
b)Master Budget
The master budget is a one-year budget planning document for the firm encompassing all other budgets. It coincides with the fiscal year of the firm and may be broken down into quarters and, further, into months. If the firm plans for the master budget to be an ongoing document, rolling from year to year, then normally a month is added to the end of the budget to facilitate planning. This is called continuous budgeting.
The budget committee usually develops the master budget for each year, guided by the Budget Director, who is usually the Controller of the company.
c) Dividend Policy
Dividend policy is the set of guidelines a company uses to decide how much of its earnings it will pay out to shareholders. Some evidence suggests that investors are not concerned with a company's dividend policy since they can sell a portion of their portfolio of equities if they want cash.
d) Trading and Profit/Loss account
Trading Account is an account that is prepared by the entities to know the profit earned or loss suffered from trading activities. On the other hand, Profit & Loss account is an account created to ascertain the net profit or loss for the period. This article excerpt deals with the difference between trading and profit & loss account.
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