0
Budgeting and Forecasting
Budgeting and forecasting are business processes essential to a company’s operations. Budgeting involves planning for revenues and expenses. Forecasting is a method of predicting trends based on historical and current events.
1,416 Questions
Marketing is all about creating value for the customer and striving to meet and then exceed customer expectations.
Market driver or drivers are considered at the time envisaging and establishing value of a product/service that's to be marketed.
These drivers are primarily trends that cause an existing or new market to develop.
The four elements of segmentation especially psychographic and behavioral segmentation are key tools in determining these trends.
So at the end of the day, you'll be able to then understand how and why the market is changing, causes of the change and eventually looking out the window that will show how new opportunities are developed.
When do you prepare a trial balance?
I can't actually do on here for you, however I can explain what a Post Closing Trial Balance is and how to get one. A Post Closing Trial Balance is a Trial Balance that is prepared only after all.
1)It helps to check for arithmetical errors (Whether if Dr & Cr matches) 2)It helps to summarize all the main information needed for quicker reference. 3)It aid in final accounts.The purpose of the trial balance is (historically) to verify if any errors were made with posting the journal entries to the ledger. Every journal entry makes debits and credits to (at least) two.
What are the Advantages of trial balance?
A trial balance is a listing of all business accounts and their balances.
Common business accounts include but are not limited to: cash; accounts receivables; prepaids; property, plant and equipment; accounts payable; bank loans; taxes payable; shareholder loans and equity.
A trial balance should show the debit and credit balances in all accounts and should add to zero.
Maintaining a trial balance allows you to immediately check the balances of all of your accounts and can help you to find some errors in your entries.
Trial balance will be "out of balance" (ie. not add to zero) if you make one of the following errors:
If you accidently forget to book one side of an entry;
If both sides of the entry are not booked at the same amount;
If you accidently book the part of the entry as debit when it should be credit or visa versa.
What is the Advantages of fixed budgets?
fixed budget is the budget whose all estimation is not changed after making this type of budget for more knowledge of budget == == == == == ==
What are the advantages of cost volume profit analysis?
One advantage of cost volume profit analysis is so that businesses can plan for the future. A business might be wanting to expand, but if the profit margin is too low, they may have to wait to expand.
What Are the Benefits of performance budget?
Businesses rely on performance budgets to determine the best time to make bold, strategic moves. By constantly monitoring and reducing expenses, firms increase cash in corporate vaults and may use excess funds to expand their businesses. For smaller companies, this is particularly interesting, as they may save enough money to grow market share and whittle away at bigger players' domination. To put it in sports terms, smaller players that save enough money stay on the bench waiting for a chance to become stars. Improved productivity is another advantage of performance budgets. These blueprints indicate to manufacturing supervisors where to look for inefficiencies and how to gradually, intelligently remedy production problems. Improved factory processes generally translate into better working conditions for production personnel, which, in turn, foster long-term productivity.
FROM-VARUN MALHOTRA
DAV COLLEGE JALANDHAR
PH-9779735358
"The budget in which income and expenditure are not equal to each other is known as unbalansed budget."
It is classified as follows:
1)Surplus Budget
2)Deficit Budget
1)Surplus budget:
It is the budget in which revenue of the government is more than expenditure.
It is advocated during inflation to reduce prices.In this case governmant imposes high taxes which in turn reduces the demand for goods and services, thereby bringing down the prices.
2)Deficit budget:
It is the budget in which the expenditure of the government is more than revenue.It is advocated during depression.In tis case the government incurs excess expenditure which increases the level of employment.This leads to increase inthe demand for goods and services, thereby leading to revival of the economy. wrong its wheny our budget falls over cause its top heavy
Explain three disadvantages of centralized database and distributed database?
what are the disadvantages of centralized database system
A Bookkeeperâ??s job duties involve handling an organizationâ??s overall recordkeeping. The records may include financial transactions, which could involve managing accounts payable and receivable, reconciling bank statements, and closing the fiscal year. A Bookkeeperâ??s job can involve more, depending on the organization, mostly revolving around financial, budget, and records for the organization.
A sample cash budget will just indicate the various sources of revenue and how it is to be spent. A cash budget is influenced by previous income and expenditure ventures.
tee Time merchandise is apractice set for Accounting. Its a way to keep track of a business using the accounting skills that your learning in class
Describe the nature of work in administration?
describe the nature of the work in office computer secritarial
What is the expenditure cycle?
The expenditure cycle is a sequence of processes that occur for a business to go from saying "I need this in order to make whatever it is our company makes" to paying for what they needed.
This process can and does differ among entities depending on the size and complexity of the organization.
For a large organization with great internal control the process usually starts with a purchase requisition. Accounting department matches the documents that they have. These are the purchase order (what we ordered), the receiving report (what we got), and the invoice from the supplier (what we are now being billed for). If these amounts match then the accounting department records a payable and also increases inventory.
Once all of the documents in the preceding paragraph are matched and made sense of the accounting department approves the invoice for payment. They would send a packet including all those documents (called a voucher packet) to the treasury department to write the check.
The treasury department will then write the check and sign it. They then cancel all the supporting documentation by stamping it paid. These voucher packets are sent back to the accounting department for posting of the payment. Which would be a debit to the account payable and a credit to cash.
How to calculate total variable cost per unit?
Easiest way: Total costs per unit - fixed costs per unit = variable cost per unit.
Also recatting into accounting.
Difference between budget and forecast with examples?
A forecast is a statement of the expected outcome of a given set of events. It follows then that a financial forecast is a statement of the expected outcome in financial terms of a given set of (assumed) events. A budget is a financial forecast based on a plan set by management. Thus, a business may prepare a budget that forecasts a revenue of, say, USD 10 million and a net income of USD 1 million, if all its strategies and actions happened as planned, and assumptions made (such as interest rate) occur. The budget is used by the management to control the business going forward. On the other hand, a financial forecast that is not a budget may be produced by the business for a different purpose, e.g. to provide a bank creditor with an idea of how the business will perform going forward. Such forecast can be varied depending on how optimistic or conservative the maker wants it to be. Thus, for the same business in the example above, a conservative forecast may be prepared for an investor that indicates a revenue of USD 9 million and a net income of USD 750,000.
A function of a budget is to use it as a tool to control the financial resources and to track budget execution. Another function of a budget is to be planning to of cash flow for an individual or organization and what is being spent.
Advantage and disadvantage of fixed budgets?
1. You haven't accounted for inflation & rise in costs. So your fixed budget won't go as far as the previous years.
2. You don't have any flexibility to deal with change in the environment (emergencies, personnel, competitive pressure).
3. Your competitors know your weak point; they can outspend you.
How do you record financial transactions?
- Identify the two items that are affected.
- Determine which of them is increasing or decreasing.
- Decide on whether to debit or credit.
- Make sure that there are debit and credit entries and that they are both of the same amount.
What are advantages of cash-flow forecast?
Where the The Balance Sheet and the The Profit & Loss Account are primarily prepared for your 'actual' year end figures for submission to Companies House, the Cash Flow Forecast needs to be, some say, pessimistic as to your sales figure and expenses.
One problem we all face at some stage is preparation of a Cash Flow Forecast for the bank manager. It is 'almost' impossible to submit honest figures when you use pessimistic figures - when you look at the finished result you say to yourself 'I would not give anyone a loan if I saw these figures'.
However, I suggest you do use pessimistic figures and inform the lender that the figures are pessimistic, and as such, are very achievable. Returning to your lender 6 - 12 months after arranging a loan or overdraft facility, and asking for more funding because your original figures were way out, will not impress the lender.
Cash Flow Forecast ExampleThe example below evenly spreads out all costs. In reality, utilities, lease, etc are paid quarterly, some in advance, others in arrear. It is advisable to enter the proper amount in the month that the payment is due to ensure you are aware of the highs and lows of your cash requirements. However, the example below is a good tool for setting out your budget.In most cases, a business should forecast for a 12 month period. However, we have cut our example down to 3 months…just so that you get the idea. In addition, we have simplified the content (listings on the left-hand-side) to make it easier to follow and understand.All figures in £OpenJanFebMarchINCOME
Sales3,0003,0003,500
Capital In10,000TOTAL INCOME10,0003,0003,0003,500FINANCES / ASSETS
Loan Repayments100100100
Interest Paid101010TOTAL FINANCES / ASSETS110110110DIRECT COSTS
Materials150150200
Direct Labour300300350TOTAL DIRECT COSTS450450550EXPENSES
Salary100010001000
Office Rent100100100
Telephone100
Utilities100
Insurance100TOTAL EXPENSES1,2001,2001,200OPENING BALANCE*-10,00011,24012,480
TOTAL INCOME10,0003,0003,0003,500
TOTAL OUTGOINGS-1,7601,7601,860
NET CASH FLOW*10,0001,2401,2401,640ENDING BALANCE*10,00011,24012,48014,120
* Negative figures would be denoted by ( ) i.e. - £500 = (500)
The last five rows of the forecast are:
Opening Balance - This figure is the ending balance of the previous month
Total Income - This is the total income figure for the month (highlighted in blue).
Total Outgoings - This is the combined total of the outgoings (highlighted in yellow). In this case, we have three outgoing costs for each month (finance, direct costs and expenses).
Net Cash Flow - This is the difference between the total income and the total outgoings. It is worked out by subtracting the total outgoings from the total income.
Ending Balance - This is the ending balance at the end of the month. This figure is obtained by adding (or subtracting if it is a negative net cash flow) the net cash flow to the opening balance of the month.
How 'Credit' Will Affect the Cash Flow Forecast
If you offered, say, 1 month's credit to your customers, you would enter the sales figure in the month that you would be paid. For example, if a customer makes a purchase of £200 in January with one month's credit - you would include the figure in the February sales.
If you want to view a more detailed cash flow forecast, you can download our FREE spreadsheet (Excel) which you can edit and use in your business.
Forecast Figures vs Actual Figures
The following example is an effective method for recording forecast figures against actual cash. Most PC spreadsheet packages (like Excel) can be set up to your needs. I suggest you set up six months of forecast and actual, giving a total of twelve columns.NovActualDecActualJanActualFebActual
01. Open Bal(263)(263)(231)(224)(199)(90)(167)(92)
02. Total Cash In250260250255(250)(240)(250)(256)
03. Total Cash Out218221218210(218)(242)(218)(215)
04. Net Cash Flow32393245(32)(2)(32)(41)
05. Closing Bal(231)(224)(199)(90)(167)(92)(135)(51)
What qualities are required in today's manager to face the challenges of globalization?
The most important quality that a manager should have is that he should be a team player. Also, he should have the foresightedness which means he should be able to forecast the future developments as accurately as possible and plan accordingly.
Difference between cost control and cost reduction?
As the name implies (Cost control) is the a focused control of costs that impact on a business i.e. Maintain spending for equipment within the agreed budgets, purchasing raw materials within the budgets.
Cost reduction, again as it implies is the actual focus to reduce costs to a company i.e. the sales are poor and therefore there has been decision made to make savings across a department or company to ensure that profits are maintained. this is done by looking for all areas of expenditure and investigating these areas to see if financial savings may be made without causing the company any operational problems.
