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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
How does historical budgeting differ from zero base?
Historical goes off what happened in previous years, whereas zero base is starting from scratch not taking into account previous year.
Budget helps to aid the planning of actual operations by forcing managers to consider how the conditions might change and what steps should be taken now and by encouraging managers to consider problems before they arise. It also helps co-ordinate the activities of the organization by compelling managers to examine relationships between their own operation and those of other departments. Other essentials of budget include:
- To control resources
- To communicate plans to various responsibility center managers.
- To motivate managers to strive to achieve budget goals.
- To evaluate the performance of managers
- To provide visibility into the company's performance
What accounts would be affected and how by a transaction to purchase supplies for cash?
This is one of the simplest transactions you can do in accounting. Because you are 1. purchasing supplies and 2. you are using cash.
You already stated part of your answer in the question. The two accounts affected are 1. Cash and 2. Supplies
Because you are spending cash, cash will decrease (credited) and since you are receiving supplies, supplies will increase (debit). Remember both of these accounts are asset accounts and therefore both maintain a debit balance. To increase an asset you must debit it, to decrease it you must credit it.
A basic budget is made up of expenses and earnings, which gives you a detailed plan for the future. In business terms a budget is usually expressed in formal quantitative terms.
Individuals create basic household budgets that would balance their income and expenses for housing, bills, food, and so on.
An individual's expenses would consist of variable and fixed costs, which would also be money going out or being spent on a regular basis. Variable costs are payments that don't stay the same, such as gas for your car, water, or electric bills. Fixed costs do stay the same, such as your mortgage or car payments.
An individual's earnings would consist of money coming in, which would be money that you would receive or earn on a regular basis.
There are many reasons why someone would create a basic budget. The main reasons for an individual to create a basic budget are to save money, to see their profit margin, to reach or maintain a desired profit, or to see if they can afford to purchase or make payments towards a future purchase or loan.
What is the difference between a budget and a financial report?
The main difference is, budget is a planned activity to meet the targets whereas financial report is the one which shows the health/wealth of the organization.
How can you eliminate non added value activities?
non value adding activities can not be eliminated. Waste are non-value adding activities that should be eliminated.
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How do you calculate the growth rate of a firm and industry?
The growth rate is the maximum possible rate with only with internal financing. The growth rate of a firm can be calculated with the following equation:
internal
Growth rate = (ROA x b) / (1 - ROA x b)
Here,
ROA = net income / total assets
B (retention rate) = retained earnings / net earnings.
Example: The following information is related to firm ABC
Net income $180
total assets $1,350
retained income $100
Step # 1:
Find the ROA and b (retention rate).
ROA = net income / total assets
ROA = $180 / $1,350
ROA = 0.13 OR 13%
b (retention rate) = retained earnings / net income.
b = $100/$180
b = .55 OR 55%
Step # 2:
By putting the information in growth formula
Growth rate = (ROA x b) / (1 - ROA x b)
Growth rate = (0.13 x 0.55)/(1 - 0.13 x0.55)
Step #3:
Solution:
Growth rate = (0.13 x 0.55)/(1 - 0.13 x 0.55)
= 0.0715 / (1 - 0.0715)
= 0.0715 / 0.9285
Growth rate = 0.077005924
So, growth rate of firm ABC is 7.7%.
How do you calculate cost of services sold?
This depends on the service being provided, but in general is pretty much the same. For example let us use a Painter who is painting your house.
The cost of supplies (i.e. paint, brushes, etc) are calculated at cost to the contractor and is the "expense" of doing the service.
Also calculating the cost of employee's (in many cases) is an expense and is calculating in the cost of services sold.
When is the US federal budget prepared?
The U.S. federal budget is typically prepared annually, beginning with the President's budget proposal, which is submitted to Congress on the first Monday in February. This proposal outlines the administration's spending priorities and revenue projections for the upcoming fiscal year, which begins on October 1. Congress then reviews, modifies, and approves the budget through a series of hearings and negotiations, aiming to finalize it by the start of the new fiscal year.
What is the difference of sales and accounts receivable called?
I'm not exactly sure of the question, but I'm going to assume you mean what is the difference in the balances of sales and account receivable.
First lets look at sales, sales (aka revenue) is what a company makes from providing a good or service. Say you sale $1,000 in watches and the buyer wants to put $500 of that on account (credit) for you that is an account receivable. The difference ($500) is recorded as "cash".
If however your question is referring to the accounts themselves, there is no "term" to refer to the difference as the accounts are entirely different themselves and on opposite ends of the accounting equation. Sales (aka revenue) is an Equity account and maintains a credit balance, while accounts receivable is an asset account and maintains a debit balance.
Basic transactions for sales and accounts receivable are: You sold $1,000 in watches, the buy pays $500 in cash and places the remaining $500 on credit the journal entry for this transaction is as follows:
Cash (debit) $500
Account Receivable (debit) $500
Sales (credit) $1,000
Who are the role players in budgeting?
the role of the internal and external role players in budgeting
What may be involved in the distribution of finance in support of organisational activities?
hat may be involved in the distribution of finance in support of organisational activities?
What is location cost volume analysis?
Location cost-volume analysis is a financial technique used to evaluate the costs associated with different locations for a business. It assesses the trade-offs between fixed and variable costs in relation to production volume, helping companies determine the most cost-effective site for operations. By analyzing factors such as transportation, labor, and facility expenses, businesses can make informed decisions that align with their operational and financial goals. This analysis is particularly useful in industries where location significantly impacts costs and logistics.
What is the Operating Budget Authority Document or OBAD?
It authorizes your base to pay for expenses for certain type of funds
Bookeeping in a Medical Office?
Book keeping is very important in medical stores and office. When the bookkeeping software as a whole is made available online, it will be of great use.
Bookkeeping in a Medical Office is in much the same as bookkeeping in any business. Although a medical office provides a service, they too still have expenses, some have investors, staff that must be paid, therefor the bookkeeping will me much like that of an other business.
What is the industry standard for overage when ordering corrugated boxes?
The industry standard for overage when ordering corrugated boxes typically ranges from 5% to 10% of the total order quantity. This overage accounts for potential defects, damage during shipping, and production variances. Customers may adjust their overage requests based on specific needs, such as anticipated spoilage or unique packaging requirements. It's always advisable to discuss overage levels with the supplier to align on expectations.
What can happen if costs not monitored in a business?
Two things mainly:
1. Costs can run out of control, causing organisations to spend more than they need to, run inefficiently, reduce their potential profit or at worst turn a profit into a loss
2. Budgets can be overstated and if an organisation actually spends less than it expects to in a particular area than those funds can be made available elsewhere in the business. If costs aren't monitored effectively such opportunities can be missed.
