Question

A range of different types and sources of data and information will be required for budgeting and forecasting. Identify and list four types and sources of data and explain how the data is applied.

Answer 1

Budget is the monetary value of all sorts of activities and proceedings in a particular period in future. This based on expectation and anticipation, known as forecasting.

Types:

Business plan: This is the main source of budgeting and forecasting. The business has to draw future specific course of activities – what they want to achieve, how they spend money, etc. A budget could be prepared considering those facts.

Information from the past: The business must have past experiences which are reflected in earlier accounting data. Such records should be analyzed and evaluated for future budgeting – suppose what is revenue income of the firm in 2017 and what is going to be in 2018.

Knowledge: Specialized persons within the organization can provide knowledge for formulating budget – suppose they can say what should be done in a complex market situation.

Online source: This is very much informative while doing industry analysis, competitors’ standpoint, etc. Online search engine may help in this regard.