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BUSINESS FINANCE TABLE OF CONTENTS INTRODUCTION 1 PART A: Purposes of Budgeting

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Added on  2020-12-09

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BUSINESS FINANCE TABLE OF CONTENTS INTRODUCTION 1 PART A1 (i) purposes of preparing a budget1 (ii) Explain how traditional budgeting approaches can help in planning future cost management for business 3 (iii) Examine whether traditional budgeting is appropriate or not for the business company in its future planning. This study includes the purpose of preparing a budget, a budget is the financial status of any business plan for a particular period often one year which have various purpose such as prediction of income and expenditure

BUSINESS FINANCE TABLE OF CONTENTS INTRODUCTION 1 PART A: Purposes of Budgeting

   Added on 2020-12-09

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BUSINESS FINANCE TABLE OF CONTENTS INTRODUCTION 1 PART A: Purposes of Budgeting_1
TABLE OF CONTENTSINTRODUCTION...........................................................................................................................1PART A...........................................................................................................................................1(i) purposes of preparing a budget..........................................................................................1(ii) Explain how traditional budgeting approaches can help in planning future costmanagement for business.......................................................................................................3(iii) Examine whether traditional budgeting is appropriate or not for the business company inits future planning...................................................................................................................4PART 2............................................................................................................................................5(4) Advantages and disadvantages of rolling budgets, Zero based budgets and activity basedbudgets:...................................................................................................................................5(5) Application of methods of budgeting)..............................................................................7(6) Analysis of most appropriate course of method of budgeting..........................................9CONCLUSION................................................................................................................................9REFERENCES..............................................................................................................................10
BUSINESS FINANCE TABLE OF CONTENTS INTRODUCTION 1 PART A: Purposes of Budgeting_2
INTRODUCTIONFinance is the basic requirement of any business, it is essential for organisation tomanage funds well and prepare a feasible budget. This study includes the purpose of preparing abudget, a budget is the financial status of any business plan for a particular period often one yearwhich have various purpose such as prediction of income and expenditure and also helps tomonitor the performance of the company called SnappyDrinks. It also explains about thebudgeting processes and how their role can be beneficial for the development of the businessmodel. SnappyDrinks budgeting process includes controlling, communicating, coordinating andoperating within the enterprise. This study also includes the usefulness of traditional budgetingincluding incremental budgeting which helps the SnappyDrinks to add the incremental amountcaused by inflation to the previous year budget to new budget period. It also explains about theadvantages and disadvantages of traditional budgeting and why it is not appropriate to use thisprocess anymore for future planning.PART A(i) purposes of preparing a budgetPurpose of BudgetingIn terms of business management, the purpose of preparing the budget are explained asgiven below:Prediction of income and expenditureBusiness owners and manager plays an important role in a business planning process andbudgeting is the critical part for any business as it will provide the information related toperformance, financial status, strategies, planning. Preparing a budget will help the businessowners and managers of SnappyDrinks to predict whether the business will make a profit or not(Foroohar, 2016). In developing a business plan, the manager is responsible to forecast the incomeand expenditure and hence profitability.Decision making on budgetingThe purpose of budgeting is to control the additional expenditure spend in theSnappyDrinks with the help of decision making process. If the budget on advertising is alreadyexceeded then managing a business requires controlling the expenditure tightly.Performance of business
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The purpose of budgeting help in monitoring the performance of the SnappyDrinks bygiving the details of actual business performance to be differentiated with the forecast businessperformance which will tell the business is living up to the expectations or not. Preparing ofbudget helps in making and coordinating the future plans for the SnappyDrinks and it helps themanager in motivating to achieve their goals (Burns, and Dewhurst, 2016). Preparing a budget canhelp the enterprise in planning, controlling, coordinating and operating to be more effective.Having a budget helps in organizing and prioritizing the activities through which they canincrease their profitability.Budgeting processThe process of budgeting help the organization to achieve their goals and increase theprofitability in future by analysing the past expenditure (Gitman, Juchau, and Flanagan, 2015). Thisprocess defines the objectives of budget such as accessing historical and actual data, developinga base budget, preparing, reviewing and refining a budget, posting and reporting results andmonitoring progress and changing the budget.Illustration 1: budget process(Source: Planning and Budgeting Process, 2013)Budget process role in development of business modelBudgeting can help in developing the business model in various ways:Strategic PlanThe budgeting process helps in writing a strategic plan for the development oforganization. A good strategic plan can help the organization plan to achieve its mission.
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