Managerial Accounting: Budgeting Process and Techniques

MANAGERIAL
ACCOUNTING

Table of Contents
INTRODUCTION...........................................................................................................................2
.....................................................................................................................................................2
Describing the budgeting process...............................................................................................2
Explain how budgeting process satisfies the purpose of planning, controlling and evaluating
performance................................................................................................................................3
Explain two budget forming technique Identify and explain the practice adopted by the
organisation. Identify and explain the practice adopted by the organisation discussed in your
selected journal article.................................................................................................................5
Comment of tradition budgeting practices constraining on the creativity and time spent on
budget formulation is better spent elsewhere..............................................................................6
Recommended budgeting for contemporary organization..........................................................7
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9
1

INTRODUCTION
Managerial accounting is a practice of company in which the company tries to identify
measure, analyse and evaluate and interpret all the financial information to the managers so that
the company can attain the goals of the business. The use of managerial accounting is necessary
as this assist the managers and other employees to analyse the situation of the company and then
to take decision for the betterment of the company. The present study will focus over the
budgeting and different aspect of budgeting with help of article named the “The effects of budget
framing and budget setting process on managerial reporting. The present study will discuss the
different aspect of budgeting and its use in the business with reference to the article and its
details.
Describing the budgeting process
Budgeting is the process of planning the future business activities by establishing the
performance goals and then put them all in the formal plan. Every company uses the budget
process in order to meet the financial goals for a company. Also, the budget should describe the
management’s assumption which is related to economy of the company and plan for adding and
deleting the product lines etc.in addition to this, the budget is also serve as a great tool for
controlling as well as monitoring the overall business operation and it also set the target for cost
and revenue which must be attain through variety of ways by providing effective strategy and
also assist to smoothen the operations as well. Basically the budget process should take care of
the following condition such that:
 Top management support: Under this, the management of the company should make sure that
it aware with the importance of budget and they all must be aware of the long term goals for
which the budget is made (Tamaș and et.al.,2020).
 Communication results:People should also promptly and clearly informed the progress through
effective communication. Also, this effective communication also implies timelines and improve
understanding
 Follow-up: budget follow-up and data feedback are consider two important part for the control
aspect of budgetary control and it must be dealing with projections and estimates for future op-
eration results.
The five step of budgeting is as mention below:
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