Accounting Assignment

Read Complete Research Material

Accounting Assignment

Accounting Assignment

Accounting Assignment


When it comes to budgeting, it evokes a phenomenon with multiple facets. The 'forecasting' is one of those aspects. We can not however treat the forecast sales figures for budgeting. The 'Forecasting' is equivalent to a forecasting exercise, in which different scenarios are possible. The 'BUDGETISIATION' or the true prospective management represents a further step: the estimation of future sales figures and cost results in a formal acceptance on the part of employees.

Plan a budget

Budgeting was more reserved for large enterprises. But ultimately, the basic functions of management, namely planning, coordination and control are the same in all small businesses, regardless of importance. In an SME, it should however be given much more attention to the 'planning' than control, since in this type of business, the entrepreneur often control very closely, personally and informally,  the activities of the company.

Naturally, SMEs have much less effect on external factors than large firms. That is why they need more opportunities to enter because they can create. This is another reason that justifies careful planning.It is also important to monitor deviations from the figures set by the budget. These differences can indeed identify future financial problems and therefore to undertake necessary actions very quickly.

The criteria for determination of budget targets

The entrepreneur retains its objectives must meet four criteria.

SIMPLE: simplicity is a guarantee of efficiency.

The objectives are not measurable goals.

ACCEPTABLE: the only good goals are achievable.

COMPATIBLE: the objectives can not be contradictory.

Establish a budget

Establish a budget is to give a numerical translation of objectives and action plans. It is a tool that helps to control and deliver projects. Therefore budgeting is for the bulk of management namely planning, coordination and control. Budgeting is a basic technique in the management and it also fulfills a management function. The task of the company management is to establish a strategy. This strategy translates into clear objectives that lead to turn on quantifiable and measurable. The art of budgeting is to achieve a balance between ambition and realism. It uses a combination of inputs as efficiently as possible to get maximum output and margins as large as possible. Of course, during budget execution, the company management must exercise continuous supervision and, if necessary, make the necessary corrections. (Brown 2009)

The budgeting process

The budgeting process takes place according to the following:Budgeting is part of the planning within the entire company. Therefore the company must first formally define its objectives. 'Mission' and 'strategy' resulted in a 'business plan' or a long term plan. From it derives the short-term plan, or budget. The budget consists of a detailed marketing plan and various partial budgets, in constant interaction. Action plans and short-term decisions thus become elements of a long term plan. An interactive game such as' give and take' between the various departments on one hand and management on the other hand can finally achieve the optimum combination of resources to implement a planned output, meeting the targets set by the company's long and short term. (Dunk 2003)

One way to define the skills

Budgets must be prepared to allow demarcation of powers and responsibilities under which different managers receive targets for the areas where they themselves can influence. These 'operational requirements' are the basis of operational and financial reports.

How is the implementation?

The budgeting process must be done by ensuring a balance between top-down approaches and bottom-up.

The work is very often in 6 steps:

The management of the company determines the company goals.

The department heads determine their targets and the means they need (in terms of human resources, investment.

The Directorate coordinates the partial budgets.

The company management sets priorities and according to them, adapt the partial budgets.

Heads of department shall establish detailed budgets.

The management of the company completes everything and sets specific goals and action plans for each department. (Balakrishnan 2007)

The Benefits of Budgeting


Budgeting led to the setting of targets. Without these figures, the company is deprived of direction and we can not foresee problems. The differences ...
Related Ads