Budgeting Coursework Example | Topics and Well Written Essays - 1500 words

Budgeting - Coursework ExampleThis is because from fifth month Nod will have decent cash non only to decent regular cash payments but also Nod will have sufficient cash to return the overdraft. The consideration is also required for capital expenditure that Nod is planning to get under ones skin in the beginning of 2nd year. The cost of car is $15000. Nod will generate $3000 on interchange an old car and the rest ?12000 will be easily generated out of operation in succeeding(a) six months. This is because cash by the end of September 2011 after paying overdraft of say $800 will be $13150. Each month enough extra cash will be generated to meet $15000 cost easily. accordingly Nod is advised to negotiate only for an overdraft of $800 in April for a period of four months. Word reckon 221 d) Budgeting and business goals Budgeting has become an essential function of any business activity so much in the sense that it becomes easy to attain the purposes for which the business activit y is planned for. In fact management plans to chance upon several goals when budgeting is under taken for a business activity. Under normal circumstances budgets are utilise for the purposes of attaining control and evaluation, communication with different concerned parties, planning, and motivation of the factors involved in the business process. Goal compass is a characteristic of successful business and a budget is a critical part of the process. It is a financial forecast of your operating and capital activities.(Carol Patterson)i Operating budgets are used for planning the operations to fulfil strategic objectives. Operating budget draws the attention of the management toward revenue projections and regular and routine expenditure to airlift that projected revenue. The management can set up goals of earning specific revenue in order to meet the required payments for the generation of that revenue and improve the entitys liquidity to meet unforeseen expenditure and payments . In fact operating budget force the management to plan for increasing profitability as in that location is direct relation between economising of the business expenditure and profitability. The main goal of planning and control is ever so achieved through efficient budgeting. The budgeting system is designed to plan and control a business. However, it is common for the budget to be gamed by its participants. For example managers may pad their budgets with excess resources. In this modality, managers will have additional resources for unheralded events during the period. If the budget is being used to establish the incentive plan, then gross revenue managers have incentives to understate the sales potential of a territory to ensure hitting their quota.(Carl S Warren, James M. Reeve, and Jonathan Duchac)ii That way revenue or operating budget can be made objectives to be achieved by the operational staff. Incentives when linked with budgets mechanically create sort of enthusiasm among the operating staff to achieve budgetary targets or goals. It is believed that businesses should always create and apply budgets in order to keep a check or track of their income and expenses. This is more applicable for small business and operations. Budgeting helps the businesses to project their profitability to be achieved over a period covered by the budget. Budgeting can spot problems and plan in advance the means to rectify those problems and issues. In a way financial