Specified Future Period

Specified Future Period A budget relates to a specified period of time, usually one year. If it is not related to a time horizon, it will be meaningless. Planning merely for a given amount of, say, sales/profits will not constitute a budget unless a time dimension is added, that is, the budget sales/profit is planned to be achieved in a predetermined time framework. Finance-Assignments.comInstructions Feel f


FINANCIAL TERMS Budgets are prepared in financial terms, that is, in terms of monetary value such as the rupee dollar, and so on. The reason is that the monetary unit is a common denominator. The various activities and operations arc expressed in different units, for example, material in terms of weight labor in terms of number/man-hours, sales in terms of territories, advertisement in terms magazine space, and

Operations and Resources

Operations and Resources A budget is a mechanism to plan for the firm’s operations and resources. The operations are reflected in revenues and expenses. This means that a budget should quantify the revenues to be realized from products/services and the expenses to be incurred on goods/services used in generating revenues. The plan also covers the resources of the firm. The planning of resources means the p


PLAN The first ingredient of a budget is its plan. The term plan with reference to budgeting has a specific connotation. It includes two aspects which have a bearing on the operation, of an enterprise. One set of factors which determine a firm’s future operations are wholly external and beyond its control. Included in this category of factors are general business conditions. government policy and size an


BUDGET-DEFINITION MEANING AND PURPOSE A budget is defined as a comprehensive and coordinated plan, expressed in financial terms, for the operations and resources of an enterprise for some specified period in the future. According to this definition, the essential elements of a budget are: (i) Plan. (ii) Operations and resources. (iii) Financial terms, (iv) Specified future period, (v) Comprehensiveness, and (vi)


PLANS/BUDGETS The final step is the preparation of budgets/profit plans. Basically, budgeting is the periodic planning to implement the alternatives during a particular fiscal period, usually one year. It converts, in other words, goals and strategies into annual operating plans. Finance-Assignments.comInstructions Feel free to send us an inquiry, we reply back real quick. Or directly email us at order@finan


STRATEGIES The next step involves laying down the strategies. Strategies denote specific methods/courses of action to achieve the goals, for instance, promotion of sales through price reduction or aggressive advertisement, financial alternatives, and so on. Finance-Assignments.comInstructions Feel free to send us an inquiry, we reply back real quick. Or directly email us at order@finance-assignments.comN


GOALS The second stage in the planning process is specifying the goals. The term goal, as an element in planning, represents targets, specific in quantitative terms, to he achieved in a specific period of time. The timing of introducing new products, purchase of new plant and machinery and expected rate of return are examples of time and quantity-oriented goals. Finance-Assignments.comInstructions Feel free


OBJECTIVES The first stage in the planning and control system is setting the objectives which are defined as the broad and long-range desired state or position in the future They are motivational or directional in nature and are expressed in qualitative terms. Examples of fundamental objectives are identification of the line of business. customer satisfaction. employee welfare, and so on. Thus, they are the ba


THE PLANNING PROCESS Budgeting, as a tool of planning is closely related to the broader system of planning in an organization. Planning involves the specification of the basic objectives that the organisation will pursue and the fundamental policies that will guide it. In operational terms, it involves four stages: (i) Objectives (ii) Goals (iii) Strategies, and (iv) Plans/Budgets. Finance-Assignments.comIns