Budgeting

Budgetary control – Concept, Objective, Advantages, and More

Budgetary control is a concept of financial accounting that helps to oversee the payments and receipts within an organization. It provides a greater tool to plan, monitor, and control financial activities within an organization. The concept of budgetary control can be linked with liquidity and management of the cash flow. However, the concept of budgetary …

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Imposed Budgeting – Definition, Example And How does Imposed Budgeting work?

Definition Imposed budgeting can be described as a process where the top management of the company is responsible for preparing a budget, and then that particular budget is then imposed on the lower management staff to be duly implemented. It is also referred to as a top-down budgeting process because it involves the higher management …

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Top-Down Budgeting – What is it? And How Does It Work?

Budgets play an important role in financial planning and control measures. Budgets often represent quantitative measures of performance appraisals known as “targets”. Deviation from these targets is measured through variance analysis. An organization can take many approaches consistent with its corporate governance set up in the budgeting process. In large organizations with a more authoritative …

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Operating and Financial Budgets: How Does It Work?

The budgeting process for any company starts with a capital or master budget. The capital budget is a forecast for the company’s long-term financial achievements. Top level management formulates the master or capital budget during the strategic planning process. The capital budget is then passed on to the departments or divided into categories by functions …

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Incremental Budgets: Example and How Does It Work?

Perhaps the most traditional approach towards budgeting is incremental budgeting. It starts the budgeting process with historic or past data, analyzes the variances, and makes adjustments for the future period. Apart from variances in previous budgets, any allocations for inflation in costs are also adjusted. As with any traditional budgeting approach, incremental budgeting is also …

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Project Budgeting Process – What Is It? And How Does It Work?

Every organization takes projects to achieve its objectives both financial and non-financial. For-profit organizations take projects to make profits; not-for-profit organizations take projects to create value. Estimating and assessing the total costs and revenue attached to a project is the starting point for any project. A project budget can be defined as: “Estimation of total …

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Budgeted Cash Flow Statement – How to prepare it?

Introduction: Managing the cash flow of your business by budgeting is an important technique that you can adopt instead of spending a hectic time counting and remembering where all the money came from and went to. The cash budget allows you to estimate all your revenues and expenses beforehand and works as a guideline to …

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