Analysis of Traditional Budgeting
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Added on 2020-09-08
Analysis of Traditional Budgeting
Added on 2020-09-08
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TABLE OF CONTENTSINTRODUCTION...........................................................................................................................1TASK 1............................................................................................................................................11. Benefit of having a budget in organisation.........................................................................12. Application of traditional budgeting in organisation..........................................................23. Analysis of traditional budgeting ......................................................................................34. Discussion of alternative budgeting system and benefits...................................................45. Application of alternative budgeting system and problems which might arise..................56. Analyse one or combination of both budgeting system which may be significant toorganisation............................................................................................................................6CONCLUSION................................................................................................................................7REFERENCES................................................................................................................................8
INTRODUCTIONBudgeting plays important role in forecasting the activities of business in effective way.This report deals with Unidate company which is facing issues as it relies on traditionalbudgeting system. Also, traditional budgeting system has been criticised on the grounds as itconsumes time to implement it and does not provide better results to organisation. Companyshould be able to make careful analysis so that each department may have enough of budget tocover its expenditures in appropriate way (Brunzell, Liljeblom and Vaihekoski, 2013). It isrequired that organisation should follow zero based budgeting so that useful insight may begained in effectual manner.TASK 11. Benefit of having a budget in organisationBudgeting is one of main concern of organisation so that it may analyse its expenses inthat way which makes efficient and could achieve maximum income from operations. Thebenefits of budgeting are listed below:1. Control over money-Budgeting gives organisation a way to control over its money in effective way so that itmay make profitable investment in that way which maximises its sales and also revenue isincreased too much extent. 2. Organise and time saving-Budgeting helps to organise the money that where organisation is spending its incomeand where from money is coming. It helps firm to watch out its costs so that it may organise itsmoney. It helps company to make investments in profitable projects which help its becomingproficient (Bierman and Smidt, 2012). When all the financial transactions are organised for taxrelated and creditors questions, time is saved in effective manner.1
3. Problems solving-It helps organisation to effectively solve its problem in the best possible way as budgetingis used to forecast problems which may become obstacle for organisation in its achieving itsgoals and objectives. This way firm may be able to solve problems which might hinder itsperformance in negative way.3. Generate extra money-Money is produced and generated with the help of budgeting as organisation come toknow about the expenses which may be reduced to some extent. This provides firm to save itsmoney in effective way (Popesko and Socova, 2016). This also provides extra source of moneywhich provides it savings that may be used for future operations. As a result, budgeting isbeneficial to company. 4. Taking debt-The Unidate company may adopt budgeting in modern day business which gives it clarityof getting debt in effective way. Debt is not a bad thing but it should be taken by analysing theneed of it. This helps company to be effective as it comes to know about the need of it and ittakes debt keeping in mind, that it will repay it in accordance with its current financial position. Budget process-The finance department prepares several worksheets for estimating budget for organisation. Nextstep is that administrator calls for meeting with managers to discuss the budget. Managerspresent there views to budget. Then next step, managers present complete budget to executive forfurther approval. Justification of budget may be required in written form. This way budget isprocessed in company.2. Application of traditional budgeting in organisationTraditional budgeting is method of budget preparation in which previous year's budget istaken as a base for current year (Cheong, Kim and Kim, 2013). It helps Unidate to preparebudget by taking last year budget. Current year's budget is adjusted for expenses and other costsby taking relevance from previous year budget. The alteration may be made in current year by2
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