ACCOUNTING FOR DECISION MAKING

Accounting for Decision Making and get it done accordingly

Accounting for Decision Making

Flexible Budget at Three Levels for the Income Statement

Level 1

Low growth rate in the economy

Low growth rate of sales as compared to last year, which is assumed around 10 %

Tough Competition from competitors due to new entrants

High Interest and tax rates

Level 2

Medium growth rate in the economy

Higher growth rate of sales that is around more than 20 %

Low competition from competitors due to our market diversification

Normal interest and tax rates

Level 3

High growth rate in the economy

Highest growth rate of sales that is around more than 30 %

Normal competition from competitors due to our market diversification

Low interest and tax rates

Company: BE Limited

Turnover/Revenues

Last Year

Level 1

Level 2

Level 3

Total Turnover/Revenues

150,000

165,350

184,500

199,650

Approx Increase w.r.t last year

0 %

10 %

22 %

33 %

Expenses

Total Expenses

82,500

99,210

79,335

103,818

Approx Increase/decrease w.r.t last year

0 %

20 %

-3.5 %

26 %

Total

Total Profit

67,500

66,140

105,165

95,832

Approx Increase/decrease w.r.t last year

0 %

-2 %

56%

41 %

Budget

Budgeting is the process of drafting, approving and monitoring the company budget. Budgeting as an instrument for the internal needs of the company, may be modulated in any way. Because of the need to prepare annual budgets in the form of financial statements, the creation of the budgeting system in the company recommends that you keep some basic principles. The application of these principles allows you to create a universal model of the structure of the main budget. When creating the budget of the main accounting office Katowice will be your best advisor. The master budget consists of two basic types of sub-budgets: the operating budget and financial budget.

Budget is an estimate of expected income and expenses, and when used as a verb as to allot (money, time, etc.). However, the definition does not detail the important functions that a properly prepared budget can and will provide (Thomas, 2006). Budgets should not be merely a bunch ...