Management Accounting and Budgeting
Finance is the life blood of a business. Therefore, financial planning is of utmost significance to a businessman. Financial planning is concerned with raising funds and their effective utilization with a view to maximize the wealth of the company.
In spite of good financial plan, the desired results may not be achieved if there is no effective control to ensure its implementation. A budget is an important tool for financial planning and control.
A budget is a plan expressed in quantitative, usually monetary term, covering a specific period of time, usually one year. In other words a budget is a systematic plan for the utilization of manpower and material resources. In a business organization, a budget represents an estimate of future costs and revenues.
Budgets may be divided into two basic classes:
- Capital Budgets
- Operating Budgets.
Capital budgets are directed towards proposed expenditures for new projects and often require special financing.
The operating budgets are directed towards achieving short term operational goals of the organization, for instance, production or profit goals in a business.
At Roz Lahey Accounting we can help with all your budgeting making sure your business and viable into the future.