Skip to main content

Unit IV - Budget


Meaning and Need for Budget:

A budget is a blueprint of the plan of action to be followed during a specified period of time for the purpose of attaining a given objective.
According to CIMA Terminology, budget is “a plan quantified in monetary terms prepared and approved prior to a defined period of time, usually showing planned income to be generated and/or expenditure to be incurred during that period and the capital to be employed to attain a given objective”.

Features:

An analysis of the above definition reveals the following essential features of a budget:
(i) It is prepared beforehand based on a future plan of actions;
(ii) It is related to a definite future period and is based on the objectives to be attained;
(iii) It is expressed in financial terms;
(iv) It shows planned income to be generated;
(v) It shows probable expenditure to be incurred;
(vi) It indicates the capital to be employed during the period;
Thus, a budget sets the firm’s goals in clear formal terms to avoid confusion and provides a detailed plan of action for achieving the goals. It is a means of communication by which the top management uses the budget as a vehicle to communicate their ideas to the subordinates who are to give them the practical shape.
It coordinates the various activities (such as sales, production, purchases etc.) of the organization in such a way that the use of resources is maximized. It also provides a means of measuring and controlling the performance of the organization, and supplies information to the management, on the basis of which necessary corrective actions may be taken.

Types of budget:-

1. Sales Statement:

It includes a forecast of total sales during a period expressed in money and/or quantities in the organization. The forecast relates to the total volume of sales and also its break-up product-wise and area-wise in the organization. The responsibilities for making the sales budget lies with the sales manager in the organization.

2. Cash Budget 2:

In the organization, the cash budget usually gives detailed estimates of (a) cash receipts and (b) cash disbursements for the budget period. In the organization, it is prepared (i) to ensure that cash is available in time for meeting the financial commitments and (ii) to use cash available in the best possible manner.

3. Production Budget:

It includes a forecast of the output during a particular period analyzed according to (a) products, (b) manufacturing departments, to schedule its production according to sales forecast in the organization.

4. Flexible budget:

A flexible budget is a budget that adjusts or flexes with changes in volume or activity. The flexible budget is more sophisticated and useful than a static budget. (The static budget amounts do not change. They remain unchanged from the amounts established at the time that the the static budget was prepared and approved.

Video Lecture Links:
https://youtu.be/2LKHzjgncNk


Contents   1   2   3   4   5
Labels:

Comments

Post a Comment

Popular posts from this blog

Interview Notes / Questions - US Taxation 1065 & 1120

  1.     163 J: Business Interest Expense limitation: Example: Capital Structure: Debt - 98% Equity - 2% 8890 Fedra Form Why IRS limiting a corporation? Corporation highly leverage on debt so they pay high interest expense to claim deductions.   2.     Sec 78 Gross up: If parent paid taxes of it's foreign subsidiaries, then the parent Can Claim that tax in us and can pay less tax Ex. 100$ (CFC) earn & paid 10$ tax & in Us parent must 21% 21$ pay can deduct 10$, must pay only 11$. line 30 state 50% deduction line 28 State 100% deduction   $210 $ 10 = $ 11 3.     Sub part F: If Sub part f is an income which is relatively movable from one taxing jurisdiction to another and that is Subject to low rates of foreign tax - This applies to CFC only.   4.     DRD: Dividend Received Deduction It is a tax deduction available to corporations in the US that receive dividen...
Post a Comment
Read more

Unit IV

4.1 Google Drive  Google Drive is a free cloud-based storage service that enables users to store and access files online. The service syncs stored documents, photos and more across all of the user's devices, including mobile devices, tablets and PCs. Google Drive integrates with the company's other services and systems -- including Google Docs, Gmail, Android,  Chrome , YouTube,  Google Analytics  and Google+. Google Drive competes with Microsoft OneDrive, Apple iCloud, Box, Dropbox and SugarSync. Features Of Google Drive Your stuff, your way – Drive Features. 15 GB space. Keep any file. Share how you want. ... Built to work with Google. Save Gmail attachments. Powerful search. Google Photos. ... Work smarter with apps. Docs, Sheets, Slides. Google Forms. ... Take Drive even further. Scan documents. Work offline. Uses Of Google Drive:  1. Backup Your Precious Files Do you have photos of a family vacation that mean t...
Post a Comment
Read more

Poem 4 - Money Madness - by D. H. Lawrence (Sem IV)

The poet has admonished mankind entire mankind to change its perception and outlook about money. The poet begins expressing his annoyance by terming man’s attitude to money as ‘collective madness’. Each human being is ‘insane’ about money. He says man is so greedy and insecure about money that he shudders spending even a pound note. He trembles when he has to spend a ten-pound note. He feels money makes us quail. Man is judged by the amount of money he has. People who have more money, are respected more in society. Those who have less money, they are discriminated against. They are loathed by people, society, and the government. In order to save ourselves from being discriminated and live respectfully, we must have enough money with us. The poet’s wish about money is that bread, shelter, and fire should be free for all in all parts of the world. In the last stanza, he appeals to all men and women that we must become sane about handling money. If continue to be insa...
Post a Comment
Read more