Question

What is the relationship between at the balance sheet and a personal financial statement? Discuss the advantages and disadvantages of budgeting. What factors contribute to a successful budget?

Answer 1

Similarities between balance sheet and personal financial statement are as follows-

Personal financial statement will be reflecting the Assets and liabilities which are held by an individual and balance sheet will be reflecting all the Assets and liabilities which are held by a corporation at a given point of time.

Personal financial statement will be helpful in deriving out the financial position of an individual whereas balance sheet will be helpful in determining the analysis of the financial position of an entity.

personal financial statement and balance sheet will always tell about the strength and weaknesses of an individual in regard to whose finance and entity in regards to their finance.

Advantages of budgeting will be related to getting proactive estimation of events which will be occurring in future and budgeting will be helping in futuristic estimation and it will be helping in better preparation for adverse economic conditions.

Disadvantages of budgeting with anything that budgeting can never be accurate in nature and budgeting always involve a higher amount of cost and they have low flexibility.

Factors which will be contributing to successful budget would be including higher flexibility of the budgeting process which can accommodate to the futuristic changes and there will be higher level of participation in budgeting formation and they should be having lower cost and there must be alternative plans.