Objectives and Benefits of Budgeting in Organizations

INDIVIDUAL
COURSEWORK

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY..................................................................................................................................3
Objectives of budgeting and benefits from robust budgetary process.........................................3
Variance report............................................................................................................................4
Area of concern............................................................................................................................5
Profitability and sustainability.....................................................................................................5
CONCLUSION................................................................................................................................6
REFERENCES................................................................................................................................1

INTRODUCTION
Budgeting is an important element of the organization wherein they prepare budget in
advance concerning the estimated expense and revenue. it acts as a base from which the
companies measure and evaluate their actual performance. It enables the companies to identify
the variances and then taking corrective actions accordingly. This report will discuss about the
concept of budgeting and its objective. A variance sheet with a consideration aspect will also be
included in the report. Lastly, this report ends with the concept of profitability and sustainability.
MAIN BODY
Objectives of budgeting and benefits from robust budgetary process
Budgeting:
It refers to a process on the basis of which a plan is being created regarding the spending
of money. As this plan is created in advance so it would be easy to determine that whether the
company is having enough money to do the things or not (Nikulina, 2019). In simple words it
refers to a process by which the expenses will be balanced with the income.
Objective:
Estimation of income and expenses:
Preparation of budget enable the company to have an estimation of income and expenses
for a specific period. It also enables the company to analyse the financial position at the end of
the period.
Action plan:
It also act as an action plan and guide that lead the company to achieve the targeted
financial position and manage the expenses along with generating the income.
Comparison:
It is one of the main objective associated with the preparation of budget. As the budget is
prepared in advance so it helps the company to measure and analyse the actual performance with
the budgeted one (Bayramov, 2021). This means that it acts as a mode of standard against which
the actual performance is being measured. Likewise, it also act as a base that can mitigate
deviation.
Forecasting and guidance: