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Budget

By | December 2012
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Budgeting
A Way business can source the forecast of financial data is through budgeting. . According to Agrawal (2008) a budget consists of a documentation that is used to translate plans of capital into a business. In other words, a budget is a plan that will show how the capital of a business is spent on planned strategies in the business Agrwal(2008). This will include all expenditure that a company will incur and the income the company predicts to make (Agrwal 2008). Research shows that budgeting brings purposes that will prove to be beneficial for business start-ups seeking external investment. According to Joy(2008) budgeting is used to find investment as it shows a useful analysis that can help develop a business model, identify the capital and resources needed and most importantly it can be used as a management tool to identify risk and show benchmarks. Joy(2008) shows a further understanding of budgeting by identifying the use of budgeting that can be used as a guide management to implement planning and facilitate goal setting. Although budgeting is important to a business plan, it is the use of different budgeting methods that can be used when planning. Cox & Fardon(1994) has identified three major budget plans that are important to financial planning of a business. The first budget plan identified was the function budget. According to Cox & Fardon(1994 ) a function budget shows a plan for specific functions within the business including, sales, production and staffing budgets. The second budgeting plan that was identifies was the departmental budget. The departmental budget is all about the general cost of running a business which includes the function budget, operation and administrations budget (Cox & Fardon 1994). The research of this literature clearly identifies the relevant budgeting methods used in all operating activities within a business. However, it is the combination of these budgeting methods that are used to source...
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