A community of people who love to write
The easiest domain name (Note the .ORG) - Absolutely Free!
Home | Submit Articles | Login
Important steps involved in preparing a budgetBY: JoJustin | Category: Business and Finance | Post Date: 2010-02-22
The preparation of a budget for any organization is a very important phase of the company. Each year the budget is revised and also looked at. The reason for this is that the budget usually outlines a framework within which the company can work. It also gives a broad framework to identify if the company will have a profit or a loss and this in turn will help to reassess the goals of the company and do appropriate changes in it.
There are various steps involved in the preparation of the budget and they are listed here.
1. Estimate long and short term needs of the Company:
The various long term needs also should be part of the budget. The main reason for the formulation of the budget is due to the fact that the long term needs of the company should be identified and the budget should try to lead the company toward the goal. Other than that, the short term goals which are the planning for the immediate year should also be done at the time of the budget.
2. Calculate the income for the past year, present year and for the ensuing year:
The income of the company for the past and the present year should be compared. Various facts should be taken into consideration and the person or the company should be able to calculate the possible income for the next year too. This will again act as a guideline for the company to function to try and achieve the immediate goals.
3. Justify the estimated income and expenditures:
Budget is a time when the previous year's income and the expenditure are assessed and the justification for the income and also the expenditure is given, if there is a change in the income that was forecast and the actual income generated. This will help to have accountability and also for the people concerned to take the whole exercise of budget seriously.
4. Estimate the costs:
The cost of various aspects is also to be estimated during the year. This will make it very easy for the company to tackle any problems during the course of the year. Usually estimations during budget time also leave a contingency fund that can be used to tackle any emergency need of funds.
5. Set budget in accordance with the philosophy of the institution:
The philosophy of one institution varies from that of another institution. The philosophy could be the allocation of funds for a specific cause which is the primary goal of the organization. This should be kept in mind at the time of the preparation of the budget.
6. Request for sufficient funds:
Another important step in the preparation of the budget is that the financial management of the company that makes the budget can also ask for a specific amount of money for them to tide over certain activities that need to be done. The request for the funds can be made to the authorities concerned.
These are the various important steps of preparing the budget.
Article Source: http://www.saching.com
About Author / Additional Info:
* Improving Interior Decoration: Handy tips for bachelor boys.
* UK's, USA's and India – What sets them apart?
* The modern Ayatollah of Turkey
* Coping with work Pressure : Balance your life and live happy.
* Roth IRA vs 401K retirement saving plans (for USA residents)
Does this article violate or infringe on your copyright ?
It is a violation of our terms for authors to submit content which they did not write and claim it as their own. If this article infringes on your copyrights, then use our Contact us form with the detailed proof of infringement along with the offending article's title, URL and writer name. If you do not hear back from us then contact us again in another 10 days. Thank you.
Comments on this article: (0 comments so far)
* Additional comments are now closed for this article *
Article Views: 17013
Copyright © 2010 saching.com - Do not copy articles from this website.
Important Disclaimer: All articles on this website are for general information only and is not a professional or experts advice. We do not own any responsibility for correctness or authenticity of the information presented in this article, or any loss or injury resulting from it. We do not endorse these articles, we are neither affiliated with the authors of these articles nor responsible for their content. Please see our disclaimer section for complete terms.