Budgeting
The Tree Doctor Internal Memorandum
TO: Yoshi K., Accounting Clerk
FROM: Art Duarte, Accounting Manager
SUBJECT: Budget Preparation
DATE: June 25, 200X
When you prepare the company budget for next year, please note the
following:
1. You need to allocate $5,000 to the computer equipment fund.
2. We will allow the building renovation expenses to accrue for
six months.
3. Prorate payment for the new furniture evenly over the year.
4. Overhead expenses include rent, furniture, utilities, and
computer services.
5. Charge salaries, telephone, and other expenses to specific
projects.
WHAT DO YOU KNOW?
Circle T or F to indicate whether each of the following statements is true or false. | Q1 |
|
T |
F |
1. The company will pay for the building renovation before the work is done. |
|
|
A1:
| False. The company will allow the expenses for this work to accrue, or accumulate, for six months. |
| Q2 |
|
T |
F |
2. The company plans to make equal monthly payments for the furniture. |
|
|
A2:
| True. The company plans to prorate, or distribute proportionately, the amount it owes. |
| Q3 |
|
T |
F |
3. The firm will not have money for computer equipment this year. |
|
|
A3:
| False. The firm allocated, or set aside, funds for computer equipment. |
| Q4 |
|
T |
F |
4. The expenses for power are part of overhead. |
|
|
A4:
| True. Overhead consists of general expenses that are not charged to specific projects. |
|
TERMS RELATED TO BUDGETING
prorate
distribute proportionately allocate
set aside or designate funds for a special purpose accrue
accumulate overhead
expenses that cannot be charged directly to specific activities or projects; examples of overhead expenses are rent and utilities |
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