[PDF] Management Accounting Assignment Sample

Added on - 21 Feb 2021

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Management Accounting
Table of ContentsINTRODUCTION...........................................................................................................................3MAIN BODY...................................................................................................................................3Objective of budgeting..........................................................................................................3Process of preparing budget for the company........................................................................3Advantages and disadvantages of traditional budgeting........................................................4CONCLUSION................................................................................................................................6REFERENCES................................................................................................................................8
INTRODUCTIONBudgeting refers to prepare the plan for future growth and arrangement of finance toaccomplish the organisation goal and objectives. It helps them to take the right decision for thegrowth of the company. The report highlights the role of budgeting in management oforganisational activity and the different budgets like sales budget, operational budget, materialbudget etc. It explains the different types of traditional budgeting and the various new budgetlike balance score card, Activity based budgeting etc. The aim of the study is to explain theadvantages and limitation of budgeting. Budgeting provides a guideline to accomplish the goaland work towards the vision of the company.MAIN BODYBudget :It is a statement to estimate the total expenses and income of the company inparticular accounting period (Rubin, 2019). It provides the information related to the companyactivities and its performance to achieve the company goal and target and improve theproductivity and profitability.Objective of budgetingTo estimate the income and expenses of the company.To evaluate the performance of the employees to achieve the company objectives.To reallocate the resources and collect the sources of finance from different channels.Process of preparing budget for the companyEstablishing goal :The first step of budgeting is to define the goal of the company thatwhat they want from the customers and the employees. Manager gathers various data related tofinancial and non financial activities and evaluate them to make effective and useful forpreparing budget.Formulating expectation :The second stage of budgeting is to form the expectationbased on the experience and review the past budget. It helps to prepare budget closer to theactual expenses (Miller, 2018).Prepare budget :The third stage is to preparing budget for the company. It refers toestimate the expenses and income of the company based on the gather data and information andthe experience of the managers.3
Monitor outcomes :After preparing the budget of t eh company the role of manager is toevaluate the performance by monitoring the outcomes from the budget. Tit help them to get thearea of improvement and find the issues related to the company budget.Adjust budget :The final stage of budget process is to adjust the budget and goal of thecompany on the basis of the evaluated outcomes. It provides the framework to perform task andmeasure the outcomes.Budget provide an idea and guideline to plan the activities and control and monitor themto get the result which was required by the company. It works as road map which direct the userto perform activities according the framework. It also helps the company to provide a way toaccomplish vision and mission.The budget is based on certain assumption and market condition. The change in marketcondition or any unexpected condition largely affect the budget of the company. It also indicatesthat budget is not relevant in each and every situation and condition.Advantages and disadvantages of traditional budgetingThe traditional budget like sales budget, performance budget, operational budget has severaladvantages and disadvantages which affect the business.AdvantagesIt helps the company to achieve the goal and objectives. The preparation of budget isbased on certain data and information which increases the reliability of the budget andencourage the employees to improve the performance and work towards a common goalof company.The evaluation of budget provides the various information and issues in the company.The estimation of income and expenditure provides a guideline to complete the taskwithin the given budget (Reome and Sinclair, 2017).Budgeting provides the various data and information to plan the activities and comparethem to get the effective result. The comparison of expected budget to the actual budgethelp to address the various issues and focus on the activities or area which needsimprovement.It provides the long term planning to control the activities and reduces the wastage ofresources and money. By controlling the activities of the company they can achieve thetarget within the budget (Asogwa and Etim, 2017).4
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