Budgeting Is a Management Tool That Explicitly Shows How a Firm

question 160

True/False

Budgeting is a management tool that explicitly shows how a firm will acquire and use resources needed to achieve its goals over a specific time period.

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Definitions:

Annual Depreciation

The amount of depreciation expense allocated for a fixed asset in one year, based on the asset's useful life and cost.

Prepaid Expense

An asset account that represents costs paid in advance for expenses that will be incurred within a future accounting period.

Accrued Expense

Expenses that have been incurred but not yet paid or recorded in the ledgers.

Accrual Basis Accounting

An accounting method where revenue and expenses are recorded when they are earned or incurred, regardless of when cash is exchanged.