Question

Compare the process of budgeting revenues and expenses with the process of budgeting assets, liabilities, and owners’ equity, and explain how this information is included in the QuickBooks Accountant budgeting process. Why is budgeting an essential practice for all organizations? What benefits does budgeting present to the organization, and what happens if an organization chooses to not budget?

Answer 1

companies, NGO, and governmental units use many types of budgets. Companies can use budget-to-actual comparisons to evaluate individual performance

1) Responsibility budgets are developed to calculate the performance of each manager.

2) Capital budgets evaluate long-term capital projects such as the addition of equipment or the relocation of a plant.

3)  master budget, which consists of a planned operating budget and a financial budget.

4) The planned operating budget helps to plan future profits and showcase a projected income statement.

5) The financial budget helps management plan the financing of assets and results in a projected balance sheet.

Budgets are a vital feature of the governor system and, an essential feature of effective management.

The advantages of budgets are:

1. As a vital part of the organization, process budgets induce planning, building people within an organization think about the upcoming. A formal budgeting process with detailed deadlines forces managers to distract their responsiveness away from day-to-day business and get down to implementation the budget.

2. Budgets endorse vital principles of message and coordination, but the formal procedure will make the sales function talk to the operations and/or customer service function. Budgets are controllers.

3. A root for functioning evaluation is offered by budgets. They are an essential part of control and examination procedure in that they determine agreed objectives to be attained, and for performance to be monitored against. This is why contribution in budgets is so important since operations managers are successfully being asked to achieve an decided objective within fixed parameters.

4. Budgets identify considerable savings in overheads and costs the important is that the budgetary control system keeps the organization fit, monitors its progress and provides an important database in the decision-making process.

Disadvantages:

1. Budgets are bureaucratic.

2. If an organization has clearly identified its volume. This idea is moved since you need to consider what the Key Indicators might be and suggest a day-to-day control system. In such situations, cash is an answer and many entrepreneurial forwarders still depend on managing the business with few indicators as shipment margin and bank balance.

what happens if an organization chooses to not budget?

If a firm chooses not to budget it cannot clearly understand their wants and need and which area to improve and which not to improve and firm should clearly understand its profits and its expenses to increase their business