BUDGETING

Budgeting

Budgeting

Introduction

This paper intends to explore the topic of budgets and budgeting and the related practice within the organization. The main focus of this paper is to describe the budgeting practice of a company where I work and it is not entirely based on the course content.

Discussion

A budget is a systematic method of allocation of physical, financial and human resource in order to achieve organizational objectives and strategic goals. Budgets are prepared so organizations can monitor their growth and progress towards achieving their goal, assist in controlling expenditure and further it predicts profit and anticipated cash flows (inc.com, n.d).

However, the company I worked for is crescent textiles, and they were very devoted about their financial aspects of organization, specifically the budgeting process. The elements that I noticed in the budgeting process are;

Communication of objectives

The foremost thing in the Crescent textile is to communicate the strategic goals and aims of the company to all the departments and employees. This way, staff may be able to know how to take step further in order to achieve those goals. Further, having a clear mind set of each department in terms of setting a target enables them to make a decision regarding their activities and actions in due course.

Identify Organization's limiting Factor

Every organization has some or the other constraints. There are limitations in the budget that a company cannot exceed and have to work within the allocated funds. Thus, there is a budgetary control system in Crescent textile, or else there would have been no need to prepare a budget in first place if the resources were not limited. Therefore efforts are made to maximize the utility within the given constraints.

Functional Budgets

Functional budget refers to the budget that is allocated to each department to carry out their respective activities to contribute in achieving organizational goals. ...