Question

We will soon be visiting chapter 8 and organizational budgeting. There are many aspects of budgeting and, conversely, many impacting results from realistic and/or unrealistic budgeting goals. Share with us your thoughts and ideas on budgeting and what impact this important topic may have on an organization's goals and ultimate success.

Answer 1

Meaning : - a budget is a financial plan for future activities the budget used in business often includes sales and revenue budget detailed by products or services, production budget, budget for each department in the company, cash budget, capital expenditure budget and others. The combination of all the budget is reffered to as the company's budget plan or budgeting. Budget helps management decide which activities it will undertake and how the company's resources will be used. If the budgeted income statement and balance sheet formed on the basis of company's budget plan are not acceptable, management can make necessary changes in the budget for desired profit.

Thoughts or ideas on budgeting

Budget helps to determine the cost a entity will incurred in the next financial year for the desired profit or production. Budgeting plans the expenses, revenues which management can change accordingly if required. The entity does not have to incurr expenses just to see what will be the result. Budgeting is important for the entity as it helps to set goals and mission and vision about the goal. Every company or entity has certain goals or objectives and budgeting plans the expenses and revenues for achievement of goals or objectives.

Budgeting on organization's goals and ultimate sucess

A budget is a comprehensive financial plan for achieving the financial and operational goal of an organization. A budget is the map of the company's strategic plans. In creating the budget the company is developing its objective of the acquisition and use of the resources. Budget formalised the activities between the departments. It provides assignment of decision making responsibility and enhancing management's responsibility. With a solid plan in place, all decision makers are working towards the same goal. Budget improves performance evaluation - providing a common base for performance discussions of the team or manager. It encourages all areas within the business to become more efficient which rolls up to a greater efficiency company wide. Budgets must be perceived to be fair and reasonable by employees whose performance will be compared to those goals.

Conclusion : - Budgeting is important for the business or organization to achieve it's goals and objectives and budgeting leads the organization or business to ultimate success.