Question

Explain the Budget Cycle enumerating the four (4) phases and the steps for each
process.

Answer 1

Framing a budget involves the financial coordination and planning of the non-financial to achieve the organization’s goal and the framed objectives.

There is no set rules and full proof for the methods to be prepared to frame the effective budgets.

Budget is the value to set monetary value for all activities and proceeding in a future for a particular period.

This would be based on the anticipation and participation termed as forecasting.

The Phases involved in the budget cycle are: -

a. Preparation and Formulation: - This is a leading source and helps in drawing the specific course of activities of the future. It correlates the activities we want to achieve, the money spent etc. A budget would be framed considering all the facts.

b. Endorsement: - The business which had past experiences would reflect the accounting data for earlier periods. These records should be analyzed and evaluated for budgeting in the future period. For example that the revenue income in 2018 of the firm and what is going to be in 2019. The person specialized in the organization would provide knowledge for framing budget and that would lead to more complex situations in the market.

c. Execution: -Planning and mapping the things are different from implementing it in the ground level efficiently. Thus, proper measures should be undertaken where a person is efficient to accomplish the task assigned.

d. Control and Evaluation: -There should be proper monitoring at each step and the difference between the targets and actual should be monitored continuously to overcome the differences arising.

PLEASE UPVOTE FOR THE SOLUTION