This website uses cookies to ensure you have the best experience. Learn more

Understanding Of Budgets Essay

3001 words - 12 pages

Introduction of budgeting (definition, process, varying roles)Budgeting is the key to good management. This is true for individuals, small family-owned companies, new high-technology companies, large corporations, government agencies, and nonprofit organisations. Managers and others in positions of responsibility must plan on a daily, weekly, monthly or annual basis if they are to operate efficiently. Because of the importance of money to businesses, and because of the fact that it is the common denominator in all departments, the vast majority of enterprises produce budgets as an aid to planning.DefinitionBudgeting is a vast and very important managerial accounting area. It is a coordinated financial plan reflecting the agreed policy and detailed intentions of an enterprise for a future period. A good definition of budget is given by CIMA (Chartered Institute of Management Accountants).A budget is a plan expressed in money. It is prepared and approved prior to the budget period and may show income, expenditure and the capital to be employed. May be drawn up showing incremental effects on former budgeted or actual figures, or may be compiled by zero-based budgeting. (Leslie Chadwick. Management Accounting. 1998. Page 103)A budget is a detailed plan which sets out, in money terms, the plans for income and expenditure in respect of a future period of time. It is prepared in advance of that time period and is based on the agreed objectives for that period of time, together with the strategy planned to achieve those objectives.Budgetary ProcessThe budgetary process has to be administered effectively in terms of initial planning, final approval and subsequent monitoring of implementation. The principal stages of budgetary process are:1. communicate the details of objectives and strategy to those responsible for preparation of budgets;2. communicate the details of budget preparation procedures to those responsible for preparation of budgets;3. determine the limiting factor which restricts overall budget flexibility and forms the focus of the budget cascade;4. prepare an initial set of budgets;5. negotiate budgets with line managers;6. co-ordinate and review budgets;7. accept budgets in final form;8. carry out ongoing review of budgets as they are implemented.(Pauline Weetman. Financial & Management Accounting. 1999)The manager can go through these basic steps to prepare the budget. Budgeting is a continuous process, which requires adaptation of existing budgets where a need for change is indicated, and the consideration of performance against past budgets when the next round of budget preparation begins.Budget's variety of RolesBudgeting is used in organisations of all types to help in the development and co-ordination of plans, to communicate those plans to the people who are responsible for carrying them out, to secure co-operation of managers at all levels and as a standard against which actual results can be compared. There are budget's...

Find Another Essay On Understanding of Budgets

Budget Cuts are Destroying Music Education: Music Programs are Essential to Education

1123 words - 4 pages program…” When times get tough it seems to people that music is just not important enough to keep in the daily schedule. Current society puts a stress on reading and math. An article from CNN states, “Shrinking state and local education budgets matched with the added pressure of the No Child Left Behind Act of 2001, which sets rigid standards in reading and math that schools must achieve in order to receive federal funding, have created a new

The strengths and weaknesses of the traditional budgeting

1467 words - 6 pages should be noted that the formats of the prepared budgets may be quite similar; for example, the format of a site-based budget may be quite similar to the format of a line-item budget. Each of the basic approaches has relative advantages and limitations.Line-item budgeting was a widely used approach in many organizations because of its simplicity and its control orientation. It is referred to as the "historical" approach because managers often base

Vertical information sharing:

978 words - 4 pages potentially benefit from it. Survey results show (Parker and Kyj, 2006) that vertical information sharing plays a huge role in understanding the performance effects of organizational commitment and budget participation. Role ambiguity is the intervening variable between the relation organizational commitment and budget participation (Parker and Kyj, 2006). Vertical information sharing consists of upward information sharing and downward information sharing

management control system

8720 words - 35 pages and illustrative of issues pertinent to the development of a contingency-based frame- work for the design of MCS, and does not attempt a comprehensive coverage of relevant research The paper is structured as follows. The next section introduces the area of contingency-based MCS research and provides an overview of find- ings over the past 20 years. The following nine sections review articles in terms of their contribu- tion to understanding

Personalisation within Adult Social Work Mental health, friend or foe?

995 words - 4 pages involved with the social work. I am going to discuss the theory surrounding it, the circumstances in which it was received and comprehended by the professionals and lay people alike in order to facilitate a better understanding of the subject at hand. Having an understanding of the process of application, the carers and service users’ perception as well as the challenges this concept has brought within the Social care system opens the mind to

Importance of Budgeting a Special Event

2389 words - 10 pages are creating an experience. For most associations, events represent a major revenue stream that can be significantly impacted by downturns in the economy and cost cutting in members’ organisations. There are, fortunately, ways to continue to offer top-quality events without raising registration fees or expanding event budgets. (Donaldson and Faucher, 2013) The importance of an event budget Creating an event budget is one of the most

Commissioners, City Council Members and The Value of Forensic Evidence

841 words - 4 pages In a county, a commissioner is a form of government, elected commissioners arrange both the executive and the legislative commission, and they represent local statute and then they control them. They also handle budgets; they overlook spending and select county staff member. The commissioner customarily consists of three to five officials. In some states, they are known as superintendents. The commissioners are authoritative over the voters

Accounting For Decision Making: Budgeting In Ceria Restaurant

4153 words - 17 pages budgetary control only. Budgetary control is defined by the Institute of Cost and Management Accountants (CIMA) as:"The establishment of budgets relating the responsibilities of executives to the requirements of a policy, and the continuous comparison of actual with budgeted results, either to secure by individual action the objective of that policy, or to provide a basis for its revision";Budget is basically a formal statement of the financial

Cost Capturing and Analysis in Construction

1002 words - 4 pages Capturing of costs in construction is a necessity to build and complete a successful project, insure budgets are met, and provide historical data for estimating future projects. Once costs are stored they can be analyzed for accuracy, forecasting the final cost, and usefulness of accurately tracked cost in future bidding processes. The cyclical nature of construction projects, when tracked and managed effectively, provide excellent historical

The Budgeting Proccess

2204 words - 9 pages years from now. That what we call the strategic planning, which will include the research of the markets, the growth opportunities and setting the company's objectives, and they should be realistic. Once all that been put into prospective, the work on the yearly budget will have to begin taking into account last years' expenditures and achievements. One of the most critical issues is usually in discussions when it comes to budgets is, which kind of

Human Genome Project

726 words - 3 pages effort with the goal of analyzing the structure of human DNA and determining the location of the estimated 100,000 human genes. In parallel with this effort, the DNA of a set of model organisms will be studied to provide the comparative information necessary for understanding the functioning of the human genome. The Human Genome Project has a lot of goals. Firstly its main goal is to identify all the 100,000 genes in

Similar Essays

The Budget Setting Process Of Highgrove Manor Hotel For 2001

2321 words - 9 pages budgets, the budget committee should make sure every managers have a clear understanding of their planning. There should not be any discordant objective between each department. At the same time, each manager needs to pay attention to the change of the external environment in which they will operate. 3. Identify the key and limiting factor 'What is the hotel able to earn in the budget period?' Such question outlines the limits to the budget

Behavioural Issues Within Budgeting Essay

1548 words - 6 pages employees would be more receptive of the targets and more committed to achieving them. In addition, the levels of staff morale would be greater than before. Participation can also improve communications and tends to improve the degree to which budgets are met. For example, participation creates a common understanding of the organisations objectives and makes achieving goals more likely.CommunicationCommunication is a necessary activity in all factors of

Budgeting Essay

883 words - 4 pages prediction system which asseses assesses the system and predicts the output at some future date'. Budgetary slack: As defined by Schiff and Lewin as the difference between the total resources available to the firm and the total resources necessary to achieve the organizational goal. In essence it implies a potential for underutilization of resources and under achieving by executives such executives create slack in their budgets by underestimating

Politics Has Too Much Influence On The Fda

1112 words - 5 pages which we are the pawns. Politics is a major influence in the decision making process of the Federal Food & Drug Administration. As the research will show how the government has influenced our consumerism through this agency and as their budget and power grows, so does the lack of autonomy in citizens personal choices. “A pattern has been shown through the years that politicians use their influence with budgets, legislation and personal agenda's