What is the most important question to ask at the start of the budget process?

Expert Solution

BUDGETS ARE PREPARED TO PLAN SOMETHING SYSTEMATICALLY FOR THE FUTURE BASED ON OUR FORECAST, BELIEFS, AND ANALYSIS.

SOME OF THE FOLLOWINGS BECOMES MOST IMPORTANT MATTERS WHICH SHALL BE ANSWERED OR SHALL BE CLARIFIED FOR THE BUDGET PREPARATION.

- THE PURPOSE OF THE BUDGET, PERIOD FOR WHICH BUDGET IS PREPARED.

- FUTURE FORECAST RELAITNG TO THE BASES ON WHICH BUDGET IS PREPARED. FOR EXAMPLE, BUDGET FOR BUSINESS OPERATION DEPENDS ON SALES FORECAST. BASED ON SALES , WE PREPARE INVENTORY BUDGET, PRODUCTION BUDGTE, RAW MATERIAL AND LABOR AND OVERHEADS BUSGET, CASH INFLOWS AND OUTFLOWS AND EVERYTHING GETS PLANNED.

FOR FORECASTING WE GENRALLY CONIDER THE MARKET CONDITIONS, AND OTHER EXTERNAL ENVIRONMENTS, PAST TRENDS AND EXPERT'S OPINION ETC.

- THIRD IMPORTANT MATTER IS ANY EXTRAORDINARY MATTERS EXPECTED TO HAPPEN IN THE PERIOD FOR WHICH BUDGET IS PREPARED. THAT MATTERS SHALL BE TAKEN CARE.

- AVAILABILITY OF RESOURCES ALSO TO BE CONSIDERED.

SO THE MOST IMPORTANT MATTERS SHALL BE CONSIDERED FIRST IS THE PERIOD FOR WHICH BUDGET IS PREPARED AND THE FIXING THE TARGETS AND GOALS FOR WHICH BUDGET IS PREPARED.

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