Question

1. Briefly discuss the budgeting process. 2. Based on your selected journal article, discuss citing examples whether the budgeting process satisfies the purpose of planning, controlling and evaluating performance. 3. The two widely used practices in preparing budgets are ‘top down’ budgeting and ‘bottom up’ budgeting. Identify and explain the practice adopted by the organisation discussed in your selected journal article and further explain the behavioural implications of adopted practice. 4. Based on your literature findings (above), critically evaluate the comment that ‘traditional budgeting practices are constraint on creativity, and the time and energy spent on budget formulation is better spent elsewhere’. 5. Based on your literature findings (above), would you recommend budgeting for contemporary organisations for planning and control purpose? Explain

Answer 1

Budgeting is a planning of expenses, sales and others. Budget is very important tool for achieving goals. Budget is compared with actual and then deviations will be recorded and measure should be taken. Budget are of two Approches top down Approch, bottom up approch.

Budget process satisfy the purpose of planning, controlling and evaluating performance. Firstly budget is planned by top management then implement then proper control over budget and then compare actual with budget and evaluating performance.

In Top down approach- Budgets are made by Top management and flow from top to lower level

Bottom up Approch- in this type of budget Lower level workers are involved in budget making and then approved my senior management

Which approach is better ?

Bottom up approch is better because in this approach workers are involved in budget making because they are the ultimate persons who have to work on budget at ground level. Ait also involves workers morale and they perform better but sometimes this approach leads to budget slack which means workers some time intentionally made easy budget.