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    Budget PPT

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    bushraanwar
    The document discusses the differences between budgets and forecasts, with budgets being financial plans agreed in advance, while forecasts predict what may happen. It provides details on the purpose of setting budgets, which is to control income and expenses, establish targets, and assign responsibilities. The summary outlines the stages involved in budget preparation, including setting the period, obtaining forecasts and past results, preparing subsidiary budgets, and creating a master budget and projected financial statements.

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    Budget PPT

    Uploaded by

    bushraanwar
    99 views15 pages
    The document discusses the differences between budgets and forecasts, with budgets being financial plans agreed in advance, while forecasts predict what may happen. It provides details on the purpose of setting budgets, which is to control income and expenses, establish targets, and assign responsibilities. The summary outlines the stages involved in budget preparation, including setting the period, obtaining forecasts and past results, preparing subsidiary budgets, and creating a master budget and projected financial statements.

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    The document discusses the differences between budgets and forecasts, with budgets being financial plans agreed in advance, while forecasts predict what may happen. It provides details on the purpose of setting budgets, which is to control income and expenses, establish targets, and assign responsibilities. The summary outlines the stages involved in budget preparation, including setting the period, obtaining forecasts and past results, preparing subsidiary budgets, and creating a master budget and projected financial statements.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    99 views15 pages

    Budget PPT

    Uploaded by

    bushraanwar
    The document discusses the differences between budgets and forecasts, with budgets being financial plans agreed in advance, while forecasts predict what may happen. It provides details on the purpose of setting budgets, which is to control income and expenses, establish targets, and assign responsibilities. The summary outlines the stages involved in budget preparation, including setting the period, obtaining forecasts and past results, preparing subsidiary budgets, and creating a master budget and projected financial statements.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    of 15

    Settings Budget

    Chapter 41
    Budget vs Forecating

     Budget is a plan which  Forecasting is the


    is agreed in advance prediction what might
    happen in future
     E.g How much money
    be needed for  E.g past pattern of
    spending and how to sales
    be financed

     Budget based on
    objectives of business
    Budget

    A budget is a financial plan for the future


    concerning the revenues and costs of a
    business. A budget shows the money needed
    for spending how this might be financed.
    Information contained in a budget may include
    revenue, sales, expenses, profits, cash and
    capital expenditure.
    The reasons for setting budget

     Control income and expenditure


     Establish priorities and set targets in numerical terms
     Provide direction and co-ordination, so that business
    objectives can be turned into practical reality
     Assign responsibilities to budget holders (managers)
    and allocate resources
     Communicate targets from management to
    employees
     Motivate staff
     Improve efficiency and Monitor performance
    Summary of the stages involved in budget preparation

    State aim and


    Set budget period
    objective of budget

    Forecasts Provide information Past results

    Prepare budget

    Co-ordinate
    subsidiary budget

    Master budget

    Projected balance sheet and profit


    and loss account
     Decide on a budget period and state the objectives
    and targets which are to be achieved.
     Obtain information upon which to base the budget
     Prepare Budget. Two important budgets are sales
    budget and production budget. These budgets are
    related and affect all other budgets.
     Draw up subsidiary budgets .Budgets can be
    broken down so that each person in the hierarchy
    can be given some responsibility for the section of
    the budget.
     The Master Budget is a summary statement of all
    budgets.e.g it shows estimated income,
    anticipated expenditure, and , thus, the budgeted
    profit for the year.
     The cash budget is prepared when all other budget
    is prepared. This budget is useful since it shows the
    monthly flow of cash into and out of the business.
     Prepare the projected balance sheet and profit and
    loss of the business. These show the financial
    position that will result from the firm’s budgets
    Problems of setting budgets

    • Using planned figures: Problems tend to arise


    because figures in budget are not actual figures.
    • Collecting of Data: The setting of budget is
    some businesses may require deal of coordination
    among different parts of businesses.
    • Conflict: The setting of budgets may lead to
    conflict between staff e.g. one person may have
    limited funds may want to spend on marketing but
    other one feel that a new machinery is needed.
     Cost : The time spent setting budgets could
    have spent on other tasks .
     Over ambitious objectives.
     External influences: It is difficult to plan
    ahead because of large and unpredictable
    changes in the external environment.

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