Budgeting Essay Example | Topics and Well Written Essays - 1000 words

Bud motoring - Essay ExampleBudgets argon not always furbish up for a fixed period, some computes ar created by adding a few more months to turn back that the sum total tenure for which the cypher has been made spans over a total of twelve months. Another type of much(prenominal) estimation is known as a forecast. A forecast is a budget that modifies in the sum of the year to make a new/mini budget which is for a period of 3 months or 6 months. By making a budget, a caller gets the following advantages It ensures that the resources are being utilize in conformity with the goals of the company. It ensures that there are proper controls over the use of resources. It can help in ensuring that the incisions of the company are engaged constructively with each other. It acts as a way of evaluating the performance of managers of the company - by comparing their achievements with the budgeted performance (Collier, 2010). Budget Cycle In a budget cycle, a budget is first planned an d then performances are controlled on its basis. In this process, a plan is first unquestionable to manage the finances of the company. This plan is then made the benchmark against which the performance is compared. If the performance is below the budgets estimations, reasons for digression are found out and measures are taken to ensure that the work performed conforms to the standard set in the budget. Working with the Budget throughout the Budget Cycle As the person in charge of the department of finance, it is obvious that you are going to be a part of every step that is taken when the budgets are prepared. These steps include the following 1. Planning and Development Planning and development is the first step of the budget cycle. When budgets are made, people involved in the preparation consider the present financial situation to make future estimations they do not disregard the previous historic data relating to the product or departments. To ensure that the budgets are as ac curate as possible, they encourage the people who are involved in the quotidian financial dealings of the products to give their inputs. This is because these people are the specialists of the products they work with every day thus, they will be able to give a better idea of the estimated revenue, expenses, etc. 2. Implementation After a budget has been prepared and loaded into the finance system, it is now the time to implement it. However, before the implementation stage is started, it is autocratic to ensure that the correct budget has been loaded. In case of any kind of an ambiguity, it is always advisable to get in touch with a professional accountant. 3. Monitoring a. Revenue and Expense Statement Detail In order to ensure that each fund has its FOPPS, the report that shows the entire details of the expenses incurred and revenue earned is need to be reconciled on a monthly basis. i. All the amounts for expenses incurred during the year, transfers made and revenue earned es sential be compared with the original document on the basis of which the entry was made and the transaction went through. ii. Once the mistakes are identified, they must be removed as soon as possible. b. Revenue and Expense Statement sum-up To make sure that the company has a full control over the operations going on, the rumor that shows the summary of the revenue earned and expenses incurred is required to be seen monthly. i. The actual amounts of expenses incurred