FINC405 WEEK 8 EFFECTIVE BUDGETING

BUDGETING

 Qn a.

  No! Accounting is a systematic process of discerning, classifying, recording, verifying, summarizing and interpreting financial information. Accounting reveals whether a business is profit making or making losses in any given period. Also, accounting further checks the value and nature of a company assets, liabilities and owners’ equity (Drury, 2007). On the other hand, a budget is a management’s quantitative expression of plans for any upcoming period.

 

 Drury(2007) proclaims that accounting plays an integral part in budgeting. Accounting is responsible for budget preparation, managing and tracking the budget expenses. Also, accounting helps in the sorting of the numbers, record balancing and making reports that will reflect the accuracy of the figures in budgets. Moreover, accounting puts every aspect of the budget into detail so that the company can exercise financial control. Without accounting, an organization will not be able to exercise control over its business operations and may run into losses (Drury, 2007).

 Qn b.

 A budget is a direct report of the financials and far-reaching ramification of the appropriate course of action that the management has chosen to follow within the next period, most probably a year. Budget is more of a plan that is expressed in money, and the managers are responsible for preparing and delivering the budget (Drury, 2007). While an organization may have a different level of departments, each one has a manager that is tasked with creating a budget for that specific department, and then all are collected and brought together for a companywide budget structure.

 Drury(2007) asserts that before any preparations of a budget take place, managers are tasked with conducting an analysis of the company, pinpointing areas of profit, where more resources might be needed and where new markets can be found. After performing the analysis, managers will be best placed in the allocation of funds within the organization, strategically distributing the financial resources to all areas of the company or business. Additional, the budget created will take into consideration all aspects of short term and long term goals to achieve company strategic objectives (Drury, 2007).

 



 



 



 



 



 



 



 



 



 



 



 



 



 

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