Individual Assignment –Detailed Outline

Course Name: Management & Cost Accounting

Submitted by: Elnaz Farhang

Budgeting
1. Introduction
One of the keys to have successful business is the ability of prediction performance of the
business. If an organization predict its performance then can be certain that resources are
arranged in the most operative approach

2. Literature review
Ruining business in most efficient way needs to deploy some fundamentals issues. One of these
issues is budgeting. Budgeting has much profit for organization to come up different barriers
which company faces. The budget performs in different ways, it could also shows, if the
performance of organization is as it should or not

3. What is budgeting
A budget is a written guesstimate of how a department or business unit will execute monetarily
and it is a plan for saving and spending. Budgeting is the translation of financial rescores into
managers’ purpose. The real importance of budgeting derives when associating this estimate
with real performance

4. The profits of budgeting

The following points are the benefits that budgeting offers to organizations

4.1 Budgets are landmarks on the path to aims

Each business and organization has its own goals and budget is an easy and quick way to making
sure that, if the organization is moving toward achieving that goals or not

4.2. Making easier decisions with budgets

When the organization wants to start an activity, quickly can find out how much that activity cost
and is that activity profitable or not. The organization can find significant section in decision
making-process in budgeting- process
4.3. Budgets can be simple
Sometimes budget is just a paper with most useful figures. Whit simple budget can decide
quickly

4.4. Budget can be ductile

It is necessary to be able to make changes according to conditions. The budget accommodates
the changes and generates an up-to-date pictures

5. Most communal budgeting used in business

Budgeting can use in any activity in an organization that has a financial influence. Some of the
most common budgets that are used in business are:

5.1. Cash budget

The estimation of a company`s cash situation for a specific period of time is cash budget

5.2. Operating budget

The operating budget shows a business`s forecasted revenues along whit predicted expenses
commonly for period of one year or less

There is more detail objects in the operating budget

6. Key approaches to emerging a budget

There are three keys which cause budgets improve. Those three keys are: 1- Bottom up 2- Top
down 3- Zero-based budgeting

6.1. Bottom up
In bottom up budgeting the supervisors and middle managers prepare the budgets and forward
them for review and approval

6.2. Top down

In this method, budgets are made by top manager and imposed on the minor layers of the
organization

6.3. Zero-based budgeting

Close looking at all expenses and justified them to top management, by this means reducing
waste is zero-based budget. On the other hand, all the activities start from zero-based budget

7. Budget tricks of the trade

When the expenses go beyond the budget there are numerous things to do in order to get back on
road
7.1 Review the budget
Before any starting any other action it is important to look closely at budget. Sometimes the
budget is disproportionate

7.2. Stop expenditure

One of the most operative methods to bring spending back in the budget path is to freeze
spending

7.3. Put up until later new projects

If spending is over budget, the organization can postpone new projects until it has enough money

7.4 Fire employees and close services

To cut expenses, the last retain is to dismiss staff and blackout facilities

8. Conclusion
Budgets are a financial departs that sets to do. Manager at all stages can play roll in organization
welfare. Budgeting is also a kind of quick warning system and can notify when something is
wrong in an organization for immediate consideration