There are a variety of budgets that can be used to assist in the financial planning process. An investigation of the budgets can provide great insight into budget design and other tools. First, I will discuss the financial tools that can best help me. Next, an analysis of the comprehensive budget will be conducted. Finally, the specialized budgets will be considered
I really believe that a budget, a line of credit and a tax budget would be extremely helpful to my financial success. A budget will help me reflect on my financial actions and consider what to expect in impending situations. I can set objectives while I collect and organize my financial information. I can also track results during different time periods such as once a month or
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The operating budget is an analysis of all money that is received and all money that is spent. This activity happens over and over again throughout my lifetime. The operating budget is a framework that permits me to document every source of revenue and every amount that is spent with details about how the money was used. This information can be gathered from past financial behaviors and economic issues that take place in society. This personal revenue helps take care of everyday needs and wants. Excess funds can be used to multiply money and build wealth. The capital budget contains items that do not happen over and over again. The plans in this budget are for intended use years down the road. College tuition, real estate investment and retirement might be some objectives that are detailed in the capital budget. Even though these financial plans are established, I must be prepared for unexpected changes in life, such as a health crisis, or lowered wages or lay-offs (Siegal, R. & Yacht, C., …show more content…
It is an excellent tool that helps one to focus on tax issues in a separate manner. You can pull out all financial information that will be impacted by tax laws. Some people work for themselves and must create a separate tax account. Knowledge of tax law and requirements are critical. Some personal taxes are paid once a year. Self-Employment taxes can be very complex and require more than one payment throughout the year, especially if there is an employee that works with them. Detailed records must be kept (Siegal, R. & Yacht, C., 2009). These specialized budgets are extremely helpful, but must be integrated into the comprehensive budget to get a complete picture of my financial
Operating budgets are budgets that deal mainly with the day-to-day operations of a facility. This may include wages, utilities, rent, and items purchased that have the intent of lasting less than a year (Johnston, n.d). This type budget provides the needed information regarding the cash on hand needed to operate the facility during a fiscal year. Capital expenditure budgets deal with more long term items such as equipment or property. As stated by Johnston (n.d.), it is necessary to have a capital budget for continued growth of the business. You complete this task by purchasing assets that produce an income. Capital expenditure budget have the potential to cover a five- to ten-year period (Baker & Baker, 2014, p.174). Items included in the capital expenditure budget may also include loan interest and bondholder's interest. The operating budget and the capital expenditure budget interact with one another. To demonstrate an example: a healthcare facility purchases a chemistry analyzer for its clinical laboratory. The chemistry analyzer is placed in the capital expenditure budget, but the maintenance for the analyzer is placed in the operational budget. The capital expenditure expense is the chemistry analyzer, but the materials used to maintain the chemistry analyzer are operational expense.
Capital Budgeting encourages managers to accurately manage and control their capital expenditure. By providing powerful reporting and analysis, managers can take control of their budgets.
Budgeting Assignment A company's budget serves as a guideline in planning and committing costs in order to meet tactical and strategic goals. Tactical goals such as providing budgetary costs for daily operations, and strategic objectives that include R&D, production, marketing, and distribution are all part of the budgeting process. Serving as a guideline rather than being set in stone, the budget is a snapshot of a manager's "best thinking at the time it is prepared." (Marshall, 2003, p.496)
Quantitative plans are called budgets. Budgets are prepared to impose cost controls on the activities of an organization (Chenhall, 1986).Budgets are then used to evaluate the performance of the management and budget itself is considered as a standard to evaluate the performance Solomon, 1956). The purpose of the budget is also to implement the strategy of the organization and communicate it to the employees of the organization Rickards (2006). The change in the external environment has led to the change in the budgeting approaches from the initial cash based budgets to the zerio based budgets (Bovaird, 2007).
A budget is only a piece of a master budget. A master budget incorporates numerous budgets constituting a plan of action for a specified time period (Kimmel, 2009). The budgeting process, depending on the size of the company, can be done by one too many individuals working together to achieve a goal or goals. Depending ...
One of the most important steps in the capital budgeting cycle is working out if the benefits of investing large capital sums outweigh the costs of these investments. The range of methods that business organisations use can be categorised in one of two ways: traditional methods and discounted cash flow techniques.
A budget is a guide for a nonprofit organization and it helps to plan the future goals and the current financial position of the organization. It is important to check the financials and budget review periodically because it is necessary to determine the actual going out and coming in of money. 4. KiDZ ROCK OUT Long-Term Goals: 4.1 Long-Term
A budget can be defined as a detailed summary of expected or likely income and expenses for a given period. Budgeting actually helps you to know if you can pay for an expense or income will be generated from a business venture. A budget is normally created using a spreadsheet and it offers a tangible, well organized and easily makes you understand the itemization of how much funds you can generate and how much fund you can push into the business. Budgeting is definitely a vital tool to assist you to prioritize your spending and manage funds regardless of how much funds an individual or company has. When one plans or monitor a budget you will be able to know wasteful expenditure, adjust as and when your financial situation changes and attain
In understanding budget theory, one of the most basic concepts is the topic of this budget theory paper, comprehensive budgeting. Concepts like capital budgets and operating budgets emanate from the concept of comprehensive budgeting, which encompasses all the terms we consider in building our personal, organizational, and governmental budgets. The following section briefly describes what a comprehensive budget means, what it is comprised off, why it is important to understand, and a few examples.
Budget is combining your income and expenses to decide how much money you are going to spend on an item. Budget is an important step to determine your financial health and financial stability. It’s an important financial tool because it can help plan for expenses, cut cost were unneeded, save for future goals, plan for emergencies that occur inexpediently, and list what you are spending and saving.
Capital budgeting is one of the primary activities of a company. Most of the company uses capital budgeting for decision making process of selecting and evaluating long-term investment. The company have to make a right decision with respect to investment in fixed asset such as purchasing of new equipment and delivery vehicles, constructing additions to buildings and many more. The decision must be right because of the project involve huge amount of cash outflow and it is committed for many years.
A budget is a documented statement of business management’s strategies for a specific period conveyed in different financial terms. A budget is able to assist in guiding a business in its operations. Expanding further on that, it can act as a constraint to control the costs of the day-to-day operations of the business. Management must make sure that measures are put in to place to make certain that the business does not stray from the budget and reduce the variance of actual and planned aspects as much as possible. Budgets are important because they act as the basis for evaluating future performance, promote efficiency, deterring waste, motivate employees and serve as early warning systems.
It requires an adequate and sound organizational structure, that is, there must be a definite assignment of responsibility for each function of the enterprise. Budgeting compels all the members of management, from the top to bottom to participate in the establishment of goals and plans. Budgeting compels departmental managers to make plans in harmony with the other departments and of the entire enterprise. Budgeting helps the management to put down in figures what is necessary for a satisfactory performance. Budgeting helps the management to plan for the most economical use of labor, material and capital. Budgeting tends to remove the cloud of uncertainty that exists in many organizations, especially among lower levels of management, relative to basic policies and objectives. Budgeting promotes an understanding among members of management of their co-workers' problems. Budgeting force management to give adequate attention to the effects of general business conditions. Budgeting aids in obtaining bank credit as banks commonly require a projection of future operations and cash flows to support
When budgeting, one must look at what will be owed to the government and those in authority. Before someone makes a decision that has to do with money, they need to consider consumer prices, inflation risks, interest rate risks, income risks, and so on. These categories have an impact on one’s personal budget. Likewise, the government can be of assistance to those in distraught financial situations.
The spending journal assignment is a great starting point for anyone who is looking to get a hold on their finances. It is beneficial because it helps you see what you spend the most money on and it allows you to change your spending habits. Not only does it make you more aware of how you spend your money, but it also makes you more accountable to yourself for how you spend it. I think that spending journals should be more common than they currently are in society. In fact the government could probably benefit from using a spending