Individual Reflection: Reflecting on the Topic of Budgeting
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Assignment 2: Individual Reflection: Reflecting on the Topic of Budgeting
Reflect upon the following in terms of the practices of your organization, providing actual examples and scenarios to illustrate your points. Note that if you are not currently employed in a finance or accounting position, you may need to set up a meeting with the person at your organization who can help you to answer the questions included below which are organization-specific.
The Assignment:
- Explain how forecasting compares to budgeting.
- Identify the key components of the master budgeted income statement.
- Identify the key stakeholders in the budgeting process at your organization.
- Explain some of the key planning assumptions used in your organization.
- Explain how your new understanding of these concepts will impact your decisions in your organization.
SAMPLE ANSWER
Individual Reflection
Question one
Forecasting resembles what is known as the budget. The mechanics applied to come up with forecasting are also the same to that of a plan. However, forecasting is different from a plan. This is due to how it is been used and the type of the data it contains. If the management is able to use the forecasting wisely, it will be a major tool that will ever ensure that the company will never go out of cash. Forecasting helps the management or a company to make informed decision and help adjust to the existing plans according to the latest information available public or private. Company use forecasting as an educated goal and as a budgeting objective, (Lal, & Srivastava, 2009, pg. 887).
Question two
Operational budget
This comprise of the company’s sales, production, direct materials cost, direct labor costs, administrative cost and the cost of goods manufactured. These categories all have their own budget and the most component is sales.
Financial budget
It comprises five different categories. The expected amount for each quarter for a SMEs will vary different, the schedule of the expected cash inflows is based on forecasting such as sale revenues, the cash budget, statement of income stamen and the statement of financial positions of all the budget cash.
Question three
Internal stakeholders
Customers, staffs, and training department
External stakeholders
Project managers and developers
Question four
The organization has the necessary and quality products and services that the consumer want and the company is in a position to produce and sell at a profit, (Vego, & Naval War College U.S. 2009, pg. 32).
Question five
This new concept will help to be able to forecast the expected future cash inflow and outflow of the company major components of the main budget. Also, the budget planning will have to involve all the primary stakeholders. This will help to come up with informed public and private information that will guide the company financial in a given fiscal year.
References
Lal, J., & Srivastava, S. (2009). Cost accounting. New Delhi: Tata McGraw-Hill.
Vego, M. N., & Naval War College (U.S.). (2009). Joint operational warfare: Theory and practice. Newport, RI: Naval War College.
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