Question

passage require analysis and breakdown

A budget is a detailed plan, expressed in quantitative terms, that specifies how resources will be acquired and used during a specified period (Hilton, 2016).

My current company is in the service industry. The following few budgets are prepared and maintained in the company on a quarterly basis: cash budget, operating budget, and human resources budget. For each line of service, a separate budget is prepared to decide the number of members for each team. Since each team member is to be paid salary for the work, therefore a limited number of personnel can be employed keeping in consideration the cost.

Cash budget details the company’s inflows and outflows during the quarter. It helps in prioritizing payments in the budget period. Its primary purpose is to provide the status of the company’s cash position at any given time. The cash budget plays a critical role in planning the firm’s cash needs. Not only does it summarize the various cash inflows and outflows from operations, as represented in the cash receipts and cash disbursements budgets discussed above, but it also incorporates nonoperational cash flows and addresses financing issues (Hilton, 2016).

Revenues and associated expenses are monitored with the operating budgets to keep the daily expenses within the limits and achieve the targeted revenues.

Human resources budget includes recruiting and hiring, training and development, employee safety and wellness, etc. Timing of the budgeting process begins 4 to 6 months before the start of the financial year and is monitored on a financial basis against the actuals.

Our company is small and even though budgets and forecast are implemented, based on Hilton’s steps on developing and implementing a budget, our company can benefit by implementing or improving in some areas. The informality of the ways its run leaves us with some flexibility in the budgeting process, but we can incorporate new ways to improve the outcomes.

Answer 1

The passage deals with the budget preparation of a small company in the service industry. This particular company prepares the budget on a quarterly basis. The budget of the company is very much flexible and open to incorporate changes if needed. Normally the company begins the preparation of budget 4 to 6 months before the start of the financial year. They are mainly preparing three budgets such as cash budget, operating budget, and human resources budget. Along with that, they prepare separate budge for each line of services offered by the company. It helps them in reducing costs by deciding the exact requirements of employees in each service team.

The Cash budget

The cash budget is used by the company to revels the details of inflows and outflows during the quarter. It also helps in prioritizing payments in the budget period and to know the status of the company’s cash position at any given time.

The operating budget

The operating budget is used by the company to monitor the revenues and expenses in a quarter. It helps the company in keeping the expenditure at the desired levels.

The Human resources budget

The Human resources budget of the company deals with recruiting and hiring, training and development, employee safety and wellness, etc.

Analysis of the budget of the company.

• The budget is helping the company to monitor the spending on the current operations as they prepare budgets on a quarterly basis.
• The budget is flexible so that the company can meet its changing budget needs.
• The company is making preparations for the budget well in advance.
• Preparation of budget for each line of services is helpful in reducing the costs by determining the exact employee requirements in every team.
• The Preparation of the cash budget helps in knowing the cash position at any given time.
• The preparation of the operating budget helps in keeping the expenditure at the desired level.
• The Preparation of the Human resources budget helps in discharging various activities of the Human resources department.

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