Question

Find an article in a Library that discusses budgeting. What are the advantages of budgeting or forecasting for a company? What types of decisions can be made with information found within a budget? Give examples. Be sure to cite your sources using proper APA format.

Answer 1

The following are the answers to the following requirements:

Budgeting:

The process of budgeting in any organisation goes about to build the budget.A good budget engages those who are responsible for making the budgets and also complying with the objectives of making a good budget.In this budgeting process both the finance and senior staff partcipation will be there and there should be a timeline to make adequate research and make the review ,feedback before the budget is presented to the higher management.A good budgeting also incorporates strategic initiatives and stipulates that the income is budgeted before expenses.Budgeting process is driven by mission and accountability.

Advantages of Budgeting and Forecasting:

Budgeting Advanatges:

• Its sets the business goals and game plan and formalizes the budget.
• It allows the company to monitor actual results against expectations
• It utlizes a budget model.
• It provides a feedback as to how the business is performing against the expectations.
• The company can make decisions that the company meet with the business goals.

Forecasting Advantages:

• It is a very forward looking tool.
• It allows the company to establish the business assumptions for a specified period of time.
• If the results are not as desired or expected the company can take action to impact the outcome .
• It allows the company to change the decision making if the outcome is not the desired outcome.

The Types of Decisions that can be found within a budget .

Budgeting is done to estimate the future while the management inputs internal and external factors of the organisations.

The finance department plays a key role in preparation of budgets in consultation with higher management.

The various decisions in which budget preparation can be used are as follows:

• It is used in the planning activities of an organisation.
• It is used for developing projects
• It is used for testing and implementation.
• It depends on the approach in the different ppases of an organisation.