Question

Discussion Question 1:

Budget vs. Actual

Describe why percentage changes identified in the budgeted vs. actual reports need to be interpreted carefully.
Provide a numerical example to aid in your explanation.

Discussion Question 2:

Paper vs. Excel vs. QuickBooks

Based on what you have learned in studying accounting in textbooks and in some cases utilizing Microsoft Excel templates for completing assignments, would you prefer to use paper, Excel, or QuickBooks to prepare financial statements and reports? Would you use just one program, both, or some other software?

Answer 1

The difference between the budgeted amount for a figure and the actual result in the report is referred to as the budget variance. The dollar amount or the percentage amount of the budget variance – or both – are displayed on a Budget to Actual report.

The whole point of analysis is to discover the “why” behind each failure and success. Finding variances is a simple matter but discovering the reasons behind them isn’t always so easy. Sometimes, bad budgeting is the culprit behind budget variance. A few adjustments to your budgeting can help bring budget vs. actual comparisons in line. Other times, the reasons for variance are much less in your control such as situations in which the price of helium sees a sudden upturn which causes the cost of production to balloon (thank you, I’m here all week) past its budget.

Once you understand where things went right or wrong, you can start to make adjustments to replicate successes and prevent repeating past mistakes. Breaking down your budget variance on a regular basis helps you gain insight into your company’s ability to create realistic budgets and perform to expectations. Performing regular budget vs. actual comparisons will reveal trends in your operations that could otherwise go unnoticed. You can use the data from your budget variance analysis to make informed decisions on things such as budgeting alterations, discretionary spending policies, or products or services that your company should double down on or possibly abandon altogether.

actual reports need to be interpreted carefully. Budget versus Actual report enables a company to know how efficiently it is meeting its budget for income and expenses. Percentage of budget column measures the actual amounts which are calculated as a percentage of budgeted amounts.

Many small business owners think of budgeting as a non-essential task, something they'll get to when they have time. These leaders, who operate their businesses without a formal strategic financial plan, are doing themselves a major disservice, as it can be impossible to consider how far their company has come, when they have no starting point or means of tracking progress.

Rather than fly by the seat of their pants, these business leaders need to conduct a budget vs. actual comparison. This process involves using financial data to assess how closely a company's spending and generated revenue meets the financial forecasting projections included in its budget. By taking the time to conduct this comparison, business leaders can determine the following: whether there are areas that need more funding; whether the budget is realistic; and whether they are on pace to meet their long-term objectives.

There are several reasons why there will discrepancies between the budget and the actual amount for expenditures and revenues. These differences can occur because of the strength of the economy, consumer needs or preferences and the actions of competitors. Because these factors can be unpredictable, it's important for small businesses to reflect on the exact cause or causes that resulted in the variance.

If Excel is a spreadsheet program you can use for different reasons like database, accounting, project management, etc., Quickbooks is dedicated only to accounting. That means, it has the features needed so businesses can manage sales and expenses, track daily transactions, invoice customers, and a lot more.

The great advantage of using accounting software like QuickBooks is that it makes it easy to stay on top of your business finances. However, expert accounting help is still advisable for most businesses.To get expert advice on running your business better and to make it more profitable.

But can QuickBooks replace your accountant entirely? Not quite. QuickBooks stores and analyzes data for you, but you still need a human accountant to give you sound financial advice and to keep up with the latest changes in tax legislation. Here are some things QuickBooks can and cannot do for your small business

QuickBooks can import spreadsheets saved in an Excel spreadsheet format directly into the program using an "Add Excel Data" wizard and display it in the appropriate section within QuickBooks, such as customers, vendors, or products.