Role of Budget in Decision Making

Management Accounting

Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
Role of budget in decision making.........................................................................................4
Flexible and static budgeting..................................................................................................4
Appropriate budget for organisation......................................................................................6
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................8

INTRODUCTION
Management accounting is utilised by the managers to select different provision that are
used for obtaining better information before taking a financial decision for the business. The
main purpose of management accounting is to perform functions within a specified and
controlled manner. The term budget is defined as an estimation of income, revenue and expenses
that are used for a specified period of time. Budgets are formulated by the professional of finance
industry and it is implemented by individual, organisation and government to spend currency in a
measured manner (Baron and Chang, 2017). This report is written from perspective of Fourex
which operate business in finance industry and perform operations related with currency
exchange. Moreover, the report highlights on role of budgeting to make optimal decisions in a
dynamic environment conditions. Flexible and static budgeting style and most appropriate from
perspective of budgeting will also include in this report.
MAIN BODY
The term budget is explicated as an estimation of income as well as expenses which is
managed by the organisation for performing its business in the future. Along with this budgets
are compiled and re-evaluated on the basis of time period. In simple terms budgets are defined as
a microeconomic concept which demonstrate trade-off are established when two different parties
exchange products or services with each other. This refers the end results of the trade-off
demonstrate the efficiency of finance management. A surplus budget means profits are foreseen
from actions, a balanced budget refers revenue is earned equal to company expenses and in last,
shortfall in budget define expenses exceed revenues.
From the perspective of Fourex it is identified that there are various services provided by
organisation to customers in finance industry that includes exchange of money, information
about exchange rate etc. This aids customers for exchange its coins and notes and convert them
into current currency for utilising it in the market (Bleyen and et. al., 2017). Moreover, budget
performs an important role for respective organisation to perform trade activities in an organised
manner within a dynamic environment because it is related with business aspects that aids
organisation for predicting, monitoring and analysing market environment.