Assignment on Budgeting, Financial Control, and Statements

This assignment addresses key concepts in financial budgeting and control. It begins by outlining general considerations for budget preparation, such as wage, expenses, balance, and objectives. The assignment then delves into the essential contents of an income statement, including income, costs, gains, losses, net income, and problem areas. It explores budgetary control procedures like improved effectiveness, distinct planning, and coordination. The assignment also examines reasons for errors in financial reporting, such as falling behind on entries and confusion between business and personal finances. It details examples of internal financial control procedures, like a detachment of duties and trial balances. The assignment concludes by providing guidelines for staying within a budget and outlining the purposes of a budget, including wage, expenses, and balance, along with three important budget statements prepared in any organization. The assignment includes a comprehensive bibliography of resources used.

Question 1 - State any four general considerations to be made before preparing a budget?
Answer- The four general considerations to be made before preparing a budget are -
1. Wage- While setting up a spending one has to concentrate on one's net salary, instead of
the total income. The measure of capital one brings home on a monthly basis is the thing
that one uses to pay off one's commitments.
2. Expenses-While setting up one's spending one should consider each cost. All the
expenses that one spends makes the span of the month should be recorded in one's
financial plan, which in turn can turn out to be troublesome at times.
3. Balance-Higher salary in comparison to costs is nothing to be worried about— simply
dole out the overabundance to a bank account or some other activity.
4. Objectives-One of the key segments one can not neglect while setting up a financial
plan is the means by which one can achieve certain monetary objectives (John., 2015).
Question 2- List any six essential contents of an income statement?
Answer- The six essential contents of an income statement are -
 Income: Total receipts earned by an organization, which is offering its merchandise or
administrations.
 Costs: The expenses carried by the organization in order to win the gross receipts.
 Gains: Earning from non-business oriented exchanges, for example, offering an
organizational resource.
 Losses: The other side of increases, for example, losing cash when offering the
organization's product or services.
 Net income: is the main issue for the detailing time frame, as this classification indicates
how much benefit or misfortune you accomplished. Contrast the figure and past periods
and against your financial plan. (David., 2012)
 Problem Areas: On the off chance that one didn't reach the set targets of the financial
plan cost. Look into the sections which can help in rectifying and monitoring the errors.
Question 3 – Give any five examples of a budgetary control procedure?
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Answer- Five examples of a budgetary control procedure are-
 Improved effectiveness: Planning is one of the most viable methods for limiting
expenses and dispensing wastage. This helps in advancing both, economy and
effectiveness.
 Distinct arranging: Budgets mainly rely on plans that have been characterized.
Spending plans help the managers in understanding what are the expectations from them.
 Determining credit needs: Budget regarding the capital expenditure help in making
things affordable for the budget chief to conjecture the need of credit.
 Co-ordination: Budgetary controlled procedure help in developing healthy and vital
relations and cooperation in the workplace.
 Motivation: Spending plans are the best motivating force for the representatives by
settling focuses on execution. (Smriti., 2015)
Question 4- Explain any five reasons for errors occurring in reporting and recording the
financial details of a company?
Answer- The five reasons for errors occurring in reporting and recording the financial
details of a company are-
 Falling behind in entries and reconciliation- It happens at times that the concerned
authorities fail in maintaining and entering the required records and information. Hence,
it is easy to state that the information is not current, which ultimately makes the process
of decision making even more difficult.
 In terms of software- During the call up of setting up business early an organizational
head gets the software in the market, and fails to learn it appropriately. Leading to the
missing out on many opportunities an functionalities.
 Confusion between business and personal finances- An individual often mistakes
between keeping his business and personal assets separate. This leads to mistakes
regarding what is to be kept official and what is to be kept personal.
 Wrong staff and workers- be it any field one always needs professionals as well as
experienced staff. In case we hire someone at the sake of friendship or reasons we might
be at a loss (Universal class, 2008).
 Being too reliable on technology- It is true that technology is helpful, but presence of
mind is necessary in that term as well. One should make sure that the technology and
softwares are being held and operated appropriately.
Question 5- Mention any five types of internal financial control procedures?
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Answer- The five types of internal financial control procedures are –
 A detachment of Duties- Detachment of obligations includes partial duty regarding
accounting, stores, detailing and evaluating. Further obligations are isolated, lesser
chances of any single representative having of conferring deceitful acts.
 Access Controls -Having ingress at various segments in the bookkeeping framework
through means of passwords, lockouts and electronic access logs will help in keeping
unapproved clients away and will help in identifying the blunders and mistakes.
 Compromises- Incidental record keeping surpasses the guarantee that balances in one's
records coordinate with balances in accounts carried by various substances, including
banks, providers and credit clients and one's bookkeeping framework and bank
explanations.
 Trial Balances- Utilizing a twofold section book-keeping framework inculcates
dependency and assures that the records are updated and maintained on a regular basis.
includes dependability and guaranteeing that the books are constantly being adjusted. All
things being equal, it is as yet feasible for mistakes bring a twofold passage framework
out of adjust at any point.
 Physical Audits – Incorporates the maintenance and tallying of various records.
Checking manually can help in eradicating the mistakes and errors on a large scale.
(Business Case Analysis, 2014)
Question 6- State any five guidelines to ensure that your company stays within the
estimated budget for expenditure?
Answer- Guidelines to ensure that my company stays within the estimated budget for
expenditure-
 Proper allotment of capital for the appropriate functioning and maintenance of
departments.
 Ruling out expenses that have not been involved in the initial budget plan for the month
of the organization.
 Verification of all the capitals oriented transactions at each level of the organization.
 Pay as per the quality of the work. In case, an individual has fared badly as per his last
performances must be paid after striking down 20% of the loss faced by the company.
 Decisions to be taken keeping in view the profits, incomes and expenditure. Nothing
should go against this, despite certain situations (Marquis., 2000).
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Question 7- What are the purposes of a budget? List any three important budget
statements prepared in any organization?
Answer- In accordance to the business, the purpose of preparing a budget includes these
viewpoints:
 An estimate about salary and its utilization.
 A device for good leadership
 A way to screen business execution (Leoissac.com, 2013)
Three important budget statements prepared in any organization-
 Wage-The principal essential factor which comes in setting up a financial plan is an
individual's wage. While setting up a spending one has to concentrate on one's net salary,
instead of the total income. The measure of capital one brings home on a monthly basis is
the thing that one uses to pay off one's commitments.
 Expenses-While setting up one's spending one should consider each cost. All the
expenses that one spends makes the span of the month should be recorded in one's
financial plan, which in turn can turn out to be troublesome at times.
 Balance-The following vital factor in setting up a financial plan is accomplishing
balance. The spending worksheet that rundowns one's salary must equivalent the side for
costs. Higher salary in comparison to costs is nothing to be worried about— simply dole
out the overabundance to a bank account or some other activity.
Bibliography
Universal class. (2008, April 27). Retrieved September 8, 2017, from Universal class:
https://www.universalclass.com/articles/business/fraud-reasoning-and-consequences-
found-in-financial-statements.htm
Leoissac.com. (2013, November 5). Retrieved September 8, 2017, from Leoissac.com:
http://www.leoisaac.com/budget/bud031.htm
Business Case Analysis. (2014, October 5). Retrieved September 8, 2017, from Business Case
Analysis: https://www.business-case-analysis.com/budget.html
David., I. (2012, January 4). Chron. Retrieved September 8, 2017, from David:
http://smallbusiness.chron.com/seven-internal-control-procedures-accounting-76070.html
John., R. (2015, March 12). Quickbboks. Retrieved September 8, 2017, from Quickbboks:
https://quickbooks.intuit.com/r/accounting-money/10-common-accounting-mistakes-
business-owners-make/
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Marquis., C. (2000, March 8). Chron. Retrieved September 8, 2017, from Chron:
http://smallbusiness.chron.com/three-important-financial-statements-financial-
management-23783.html
Smriti., C. (2015, MAy 5). YourArticleLibrary. Retrieved September 8, 2017, from
YourArticleLibrary: http://www.yourarticlelibrary.com/budget/budgetary-control-10-
advantages-of-budgetary-control-business-management/25771/
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