Question

1. Task 4
   1. What accounting principles apply to budgeting?
   2. What legal and ethical considerations were used in preparing your budgets?
   3. What milestones and performance indicators
   4. Can you identify any financial risks within these budgets?
   5. What protection strategies would you propose?
   6. Would these risks and strategies affect the organisation’s policies and procedures?
   7. How should budget reports be distributed?
   8. What milestones and performance indicators would you include in your budget to monitor financial performance?
   9. How would you monitor budget outcomes?

Answer 1

a) What accounting principles apply to budgeting?

Budget is an estimation of revenue and expenses for a specific period of time.in short budget is financial planning for future.

while preparing budget need to apply some principle

1)Managment support:

Top managment support and co-ordination is required to prepare budget . top manager can set up goal and objective and according to that they can instruct to managers.

2)Employee Involvement:

when budghets are prepared for company all level of employees are involve in it,without there help not possible to make budget.every employee is important for preparing budget.

3)Statement of organisational goal:

Goal of making budget should be clearly stated.the organisational gold should be set within the framwork of corporate objectives.

4) Responsibility Accounting:

Managment should individually explain there expectation to employees

5)Organisation structure:

There should be well planned organisational structure.and the responsibility of budget manager should be known to people in organisation

6) Flexibility:

Budget should be flexible so can make changes in budget.and will be easy to compare with standard with actual budget.

7)Good accounting system:

Organisation have good accounting system so they will get perfect and accurate data to make budget

What legal and ethical considerations were used in preparing your budgets?

1) Honest books:

Honesty is main part of ethics .In preparing budget your financial data should be accurate as per your business transactions.

and if its not correct then it is not ethical.there should be transfarancy in your financial data.

2)Responsibility:

An ethical business always clear about its responsibility.they always follow the companies policy they dont find ways for extra earning.

3)Decency:

Businesses run by people,business do well by treating people well ethical companies build there bottom line on principle of kindness and mutual gain.

What milestones and performance indicators

Performance indicator factors are

1)Revenue Growth:

Sales growth is the most important part of success.that growth should be positive.and if it is negative the it is indicate something is wrong

2)Income sources:

You should know the revenue sources of business.

3)Profitability:

By tracking expenses and income of business and compiling it in report you will know your profitability.

4)Working capital:

working capital use to finance your organisation on daily basis.it help company to run its activity by using working capital..

Can you identify any financial risks within these budgets?

Yes we can find risk in budgets

Risk means uncertinity,when you make budget there is always risk ..

Financial risks are:

1) Price Risk:

   Budget shows future estimation of prices when   make budget there can be possibilities of changing the actual price and budgetory price that will affect on our estimated revenue.

2) Overheads risk:

There is always uncertinity of expenses what we estimated and what actually expenses are happen.