Budgeting: Importance, Benefits and Process of Administration

This assignment delves into the critical role of budgeting in financial management, outlining its importance and benefits for businesses. It emphasizes how budgeting aids in collecting and managing financial information, limiting expenditures, planning for future growth, and creating a financial roadmap. The assignment also details the process of budget administration, which includes defining goals and gathering data, reconciling goals and data, creating a budget, monitoring outcomes, and adjusting the budget, goals, or expectations. References to relevant literature are provided to support the concepts discussed. The assignment aims to provide a comprehensive understanding of budgeting's significance and practical application in business contexts, guiding users through the key steps of budget administration.

Task
Describe the importance and benefits of budgeting and the process of budget
administration.(not more than 800
words).
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Budgeting is a concept and methodology which is used by the manufacturing companies,
individual, government or any other company to predict the future and make various
decisions about the process and activities of the company. This process helps the company to
make various new decisions and strategic decisions about the activities of the company. It is
a important concept of financial success. Budgeting is a continuous process which starts
from planning and collecting the budget process and financial information and never ends.
Budgeting is very important for the business to analyse and manage the business functioning
of the company. Some importance of the budgeting has been discussed below:
1. Facts:
Budgeting process helps a company to collect the various financial information’s and
manages it in a proper way. Further, it has been analysed that budgeting helps the
company to manage all the business functions and the process in a proper manner to
analyse and examine the future of the company and manage over the revenue and
expenditure of the company (Garleanu & Pedersen, 2007).
2. Limit expenditure:
Budgeting process helps a company to limit the expenditure of the company through
implementing various strategies and polices it in a proper way. Further, it has been
analysed that budgeting helps the company to manage all the business functions and
the process in a proper manner to analyse and examine the future of the company and
manage over the revenue and expenditure of the company.
3. Plan for future growth:
Budgeting process helps a company to predict the future growth of the company in a
better and proper way. Further, it has been analysed that budgeting helps the
company to manage all the business functions and the process in a proper manner to
analyse and examine the future of the company and manage over the revenue and
expenditure of the company.
4. Creates financial roadmap:
It helps the company to create the roadmap of finance, so that a good decision could
be made. Further, it has been analysed that budgeting helps the company to manage
all the business functions and the process in a proper manner to analyse and examine
the future of the company and manage over the revenue and expenditure of the
company (Garrison et al, 2010).
5. Considerations:
Budgeting process helps takes the consideration of various process to manage the
functions and the activities of the company.
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Process of budget administration:
Further, the budget process of the company has also been analysed to identify that hw the
budgeting process could be done:
(Noreen, Brewer & Crawford, 2011)
1. Define goals and gather data:
This is the first process of the budgeting which helps the company to manage and
administer the financial information to manage the process and the activity of the
company.
2. Reconcile goals and data:
This is the second process of the budgeting which helps the company to reconcile the
financial information to manage the process and the activity of the company.
3. Create budget:
This is the third process of the budgeting which helps the company to manage and
administer the financial information and male the budgeted on the basis of that to
manage the process and the activity of the company (Davies & Crawford, 2011).
4. Monitor outcomes:
This is the forth process of the budgeting which helps the company to monitor all the
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changes which has taken place into the actual and budgeted figures.
5. Adjust budget, goals or expectation:
This is the last process of the budgeting which helps the company to achieve its
goals.
References:
Davies, T. & Crawford, I., (2011). Business accounting and finance. Pearson.
Garleanu, N. B., & Pedersen, L. H. (2007). Liquidity and risk management (No. w12887).
National Bureau of Economic Research.
Garrison, R. H., Noreen, E. W., Brewer, P. C., & McGowan, A. (2010). Managerial
accounting. Issues
Noreen, E. W., Brewer, P. C & Crawford, I., (2011). Managerial accounting. Pearson.
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