财务会计英文版课后习题答案.docVIP

PAGE 130 Chapter 18Chapter 18 PAGE 131 PAGE 123CHAPTER 18DISCUSSION QUESTIONS1. The first general purpose of budgeting is to allow individuals or companies to develop a plan to achieve a specific goal. The second purpose is to allow ongoing comparison between the plan and actual results in order to better control operations or activities.2. Strategic planning is the macro-level, long-range planning of firms in which management evaluates resources, weaknesses, constraints, and competition and decides how, where, and when to operate. At the strategic planning level, firms decide which products to sell, how to market their products, and how they will respond to demands of government and consumer groups, competition, and so on. Capital budgeting is planning for the acquisition of property, plant, and equipment that will help management reach the goals outlined at the strategic planning level. Capital budgeting involves making decisions such as which assets to purchase and whether to lease or buy. Operations budgeting, or simply “budgeting,’’ is the planning of operations for the coming period. This type of budgeting is usually rather short term. 3. The advantages of a top-down budget are: a. Top management, who knows the strategic direction of a firm, makes budgeting decisions. b. Top management has no special interest to protect and so can be objective. c. Top management, which involves a relatively small group of people, can make more efficient decisions. The advantages of a bottom-up budget are: a. More people participate in the budget’s preparations and, therefore, “buy into’’ and support the budget. b. People are better motivated by a budget they help prepare. c. Lower-level managers are closer to customers and technology and, supposedly, have better information and may make better decisions.4. One year is the typical budget horizon because it corresponds to the period over which performance must be measured for tax and financial re