From the course: Accounting Foundations: Budgeting
Join today to access over 22,600 courses taught by industry experts or purchase this course individually.
Involving people in the budgeting process
From the course: Accounting Foundations: Budgeting
Involving people in the budgeting process
- The top-down approach, sometimes referred to as authoritative budgeting, is when top management prepares a firm-wide operations budget and distributes it to the major segments of the firm, and then hopefully it trickles down to each lower-level segment manager. Its proponents argue that only top management knows the strategic direction of the firm as aware of all the external factors influencing its operations. Further, since top management involves only a few people who have risen to positions where they no longer have special interests to protect, they are in the best position that efficiently coordinate the competing needs of the various business segments. Well, and that makes some sense. The alternative is the bottom-up approach, also known as participative budgeting. Each division manager in a bottom-up approach prepares a budget request for his or her segment. These requests are then combined and reviewed as they move up the organizational hierarchy, with adjustments being…
Practice while you learn with exercise files
Download the files the instructor uses to teach the course. Follow along and learn by watching, listening and practicing.
Download courses and learn on the go
Watch courses on your mobile device without an internet connection. Download courses using your iOS or Android LinkedIn Learning app.