Budeting

all about budgeting

?
  • Created by: steph
  • Created on: 20-03-12 20:47

deffinition of budgeting.

 Establishing a planned level of expenditures, usually at a fairly detailed level. A company may plan and maintain a budget on a cash basis.

1 of 7

positives.

+ They provide direction and coordination, ensures spending is geared towards the aim of the business.

+ motivate staff, encourages responsibility and recognising gain from meeting budgets. 

+ improve efficiency of a business.

+ can predict future, forecasting ability.

2 of 7

drawbackes.

- Difficult to monitor fairly, they must rely on the honesty of the budget holder.

- Allocations may be incorrect; unforeseen changes may mean the budget is not right.

- saving may not be seen an interest, saving money on other things to keep within a budget can be bad within the long run.

3 of 7

budgets should...

Be consistent with the aims of a business and based upon the options of as many people as possible. Set challenging but realistic targets.

4 of 7

varience analysis.

The process of which the outcomes of a budget are examined and compared with predicted figure so that reasons for changes are found.

5 of 7

favourable variance.

when costs are lower than expected and revenue is higher than expected.

6 of 7

adverse variance.

when costs are higher than expected or revenue is lower than expected.

7 of 7

Comments

No comments have yet been made

Similar Business Studies resources:

See all Business Studies resources »