Assignment on Accounts and Finance

Running head: ACCOUNTS AND FINANCE
Accounts and Finance
Name of the Student:
Name of the University:
Author’s Note:
Course ID:

1ACCOUNTS AND FINANCE
Table of Contents
Introduction:....................................................................................................................................2
Requirement 1:.................................................................................................................................2
Requirement 2:.................................................................................................................................3
Requirement 3:.................................................................................................................................5
Requirement 4:.................................................................................................................................7
Conclusion:......................................................................................................................................7
References:......................................................................................................................................9

2ACCOUNTS AND FINANCE
Introduction:
In the current global competitive business environment, any organisation that does not
prepare budget paves the path for a number of financial issues. This idea holds good for all types
of business organisations irrespective of their sizes and ages (Armitage, Webb and Glynn 2016).
On the contrary, an organisation that establishes short-term and long-term business goals through
detailed business plan could develop a roadmap in order to ensure financial success and
expansion opportunities. Budgeting is a procedure involving a series of activities conducted for
preparing a budget. Thus, budget could be defined as a quantitative plan for determining the
activities to be selected for future. The paper would intend to explore the objectives of
developing budget for Sky Cafe. The next section would involve analysis of revenue variance as
well as spending variance of the organisation for July. The next segment would emphasise on
identifying those activity variances needing management concern. Finally, the paper would shed
light on providing recommendations to the organisation so that it could support its objectives
effectively.
Requirement 1:
Sky Cafe is a firm located near an airport engaged in preparing meals for the citizens and
tourists visiting the nation. Hence, it is crucial for the management of Sky Cafe in developing
budget by taking into consideration the following objectives:
Estimation of cash flows:
As Sky Cafe is assumed to be in the growing stage, budget is deemed to be valuable. This
is because the organisation is dependent on seasonal sales. Moreover, this type of organisation

3ACCOUNTS AND FINANCE
faces issues in predicting the amount of likely cash needed in future and this might result in
periodic cash crises (Ax and Greve 2017). With the help of budget, it becomes easy to estimate
cash flows, which is considered as a reasonable budgeting goal.
Allocation of resources:
Sky Cafe could use the budgeting process as a method for determining the areas, in which
the funds would be allocated to different activities like purchase of fixed assets. With the help of
a suitable objective, it needs to be combined with capacity constraint analysis for ascertaining the
areas of resource allocation (Fullerton, Kennedy and Widener 2014).
Modelling scenarios:
When there are a number of alternatives for any organisation, a set of budgets could be
created based on varied scenarios for predicting the financial outcomes of the strategic
directions. However, Sky Cafe need not be overly optimistic while inputting assumptions in the
budget model for avoiding unlikely outcomes.
Measurement of performance:
Sky Cafe could prepare budget for using the same as a base in order to judge staff
performance with the help of budgetary variances. However, constant monitoring is needed for
this objective, as the staffs try to alter budget by making their personal goals easy for
accomplishment (Langfield-Smith et al. 2017).