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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
3 Factors are : Present or purchase value of item (P)
Its scrap value at the end of its life-span (S)
The life span of the item considered (L) 2 Methods are
Straight line method
Diminishing value method Straight line method: A straight line would define all values during the life span.
The slope of the straight line = (P-S)/L
Y-axis intercept = P (at Time = 0)
Y value at end of life span = S
Diminishing Value Method A parabolic curve will connect P & S (instead of a straight line in the previous method) with the apex of the parabola tending to be at point S
Incremental Budgeting is a system that uses the previous period's budget (or actual performance) as a basis for the next period's budget. Incremental amounts are added to the previous period's budget for the new budget period. Since this is based on allocations from the previous period and is progressive it could lead to a "spend it or lose it" attitude which is not very cost effective for an organization. It doesn't take into consideration changing circumstances either. The only real advantage is it is simple and change is gradual.
How do you calculate cost of fund in a bank?
Roughly it is:
(IE / TDA)*100 = cost of funds in %
Where:
IE = Total annual cost for Interest Expenses (including bonds, repos etc)
TDA = Total Deposits Amount (including bonds, repos etc)
The actual calculation is much complicated.
What are some examples of topics for a research proposal concerning the accounting field?
what are some research proposals topics in accounting and finance
What is the objective of process capability?
The objective of process capability is to determine what is the probability of the process producing product within the tolerance or specification limits provided by the customer.
What is the traditional method of cost accounting?
The traditional method of cost accounting refers to the allocation of manufacturing overhead costs to the products manufactured. The traditional method (also known as the conventional method) assigns or allocates the factory's indirect costs to the items manufactured on the basis of volume such as the number of units produced, the direct labor hours, or the production machine hours. We will use machine hours in our discussion. By using only machine hours to allocate the manufacturing overhead to products, it is implying that the machine hours are the underlying cause of the factory overhead. Traditionally, that may have been reasonable or at least sufficient for the company's external financial statements. However, in recent decades the manufacturing overhead has been driven or caused by many other factors. For example, some customers are likely to demand additional manufacturing operations for their diverse products. Other customers simply want great quantities of uniform products. If a manufacturer wants to know the true cost to produce specific products for specific customers, the traditional method of cost accounting is inadequate. Activity based costing (ABC) was developed to overcome the shortcomings of the traditional method. Instead of just one cost driver such as machine hours, ABC will use many cost drivers to allocate a manufacturer's indirect costs. A few of the cost drivers that would be used under ABC include the number of machine setups, the pounds of material purchased or used, the number of engineering change orders, the number of machine hours, and so on.
How can you get scholarship from Norwegian universities for postgraduate?
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Advocate/Lawyer
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Why will cash flow ending balance not equal cash and bank balance in the balance sheet?
Cash balance from cash flow statement should always tally with balance sheet cash balance otherwise it means that cash flow statement is not prepared accurately and proper investigation should be launched to check the discrepancies .
flexible budget and actual results
Does a Balance Sheet show a companys true worth?
A Balance Sheet shows a company's Net Book Value which is the Net Worth according to their accounting practices. This is normally not the value of the company. If a company is publicly held, it will have a market value which is the value of all outstanding stock. If the company is privately held, and was offered for sale, the selling price would typically be greater than the Net Worth of the company. The value might be calculated based on projected Sales or Earnings.
Accounting treatment for surplus of revaluation of fixed assets?
a revaluation increase is credited to equity as a revaluation surplus, unless it's a reversal of a revaluation decrease, when it should be recognised as income.
Sales = 1500000
Less. variable cost = 1050000
Less: fixed cost = 200000
Net income = 250000
Where do you place capital appreciation on the balance sheet asset or an equity entry?
Capital is an equity of company so capital appreciation is also come to equity part of balance sheet.
Distinguish between IRR and ARR method in capital budgeting?
arr is for 1year only..irr can be for a period of 1 or more years
Why is it necessary to prepare a projected financial statement though the future is uncertain?
Projected financial statement shows management the way to go before actually going to that way in this way at least management has the plan where to go how to perform operations what need to do to achieve desired results and if there is any change at least they have something against which they can compare what went wrong.
What is the difference between a consolidated and non-consolidated balance sheet?
It is very simple:
consolidated financial data: One a parent company posts/files its combined financials that is parent's data as well as subsidiaries data collectively (Summed) that is Consolidated Financials.
Non/Un-Consolidated Financials: When Parent company posts/files its financials separately that is stand alone financials of parent and side by side its subsidiaries data.
How can you calculate Incremental working capital investment rate?
Incremental net working capital investment rate = Incremental working capital investment / Incremental sales.
The overall change in cash calculated on the statement of cash flows will always be the same as?
The difference between the beginning and ending cash balances on the balance sheet.
Double- Declining- balance Method
-MBA in Accounting Professor
What are the factors affecting owner's equity?
The issuance of stock. The accumulation of profits and/or losses (Retained Earnings). The payment of dividends. The re-purchase of your own stock (Treasury Stock).
What is airasia new technology to gain competitive advantage or improve its profitability?
they dont have any technology
Why is sales forecast a key element in a capital budget decision?
Sales forcast determines that how much production is required and then to meet that production level how much new investment and machinery etc required.
Differentiate between profit sharing and co-ownership schemes of incentives to labor?
Profit sharing and co ownership of labour
Is depreciation cost relevant in Outsourcing?
Only the total amount of a new machine is a relevant cost because this incurs in the future and incurs when a certain decision is made. The depreciation of old machines is a sunk cost so this is an unavoidable cost. The amount for the old machine you sell is a relevant cost because you will get this amount if you sell the old machine and buy the new one.
What is the difference between goodwill and brand name?
Goodwill is the difference between the price paid for a business and the net book value of assets in the balance sheet of that business.
The price paid for a business is usually more closely related to its profit stream rather balance sheet value. A strong brand can influence profit but would not appear as an asset on the balance sheet. The level of profit could also be influenced by staff competences and staff competences are not shown as an asset on the balance sheet.
That difference between price paid and balance sheet value of assets might be due to the strength of the brand name, but it could also be due to other things.
