Faisal ACC 301 Chapter 22, Budget
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Budget:
This is a comprehension financial plan to
achieve the financial goals, setting forth the expected route for achieving the financial operational goals of an organization.
Benefits of Budget
Enhance management responsibility
Assigning of decision making responsibility
Coordination of activities
Performance evaluation
OPERATIONAL BUDGETING
Establishing budgeting amount:
There are two methods
Behavioral approach
Total quality management approach
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You must keep the budgeted level that is
reasonable and achievable. Don’t determine keep heavy budget. Such level of budget
which is achievable and reasonable. When you make budget financial budget). In it eliminate the non-value added activities.
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Eliminate inefficiency and non-value added act continues improvement is TQM.
Budget level represent the absolute efficiency such budget is set which represent the absolute efficiency and
eliminate the non-value added activities.
To achieve this, a level of complete
efficiency must make by eliminating non value by using sales manager pay, tax etc.
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For how long budget is being made policy duration of the management called budget
period. Long policy has long term budget while short policy has short term budget.
Period should be according to the management policy. Different types of budget has different period of times. E.g. capital expenditure
budget is a long term budget having time
period 5-10 years known as long term budget.
