Budget

Budget

Question 1

The Revenue Forecasting is done by using three approaches and there is separate treatment for each of them. The approaches are qualitative, time series, and causal analysis. The other name for the qualitative is the judgmental approach; this is basically based on the judgments made by human beings although the use of some mathematical approach is also possible through this approach. It can be stated as one of the most commonly used approach and this has been proved so many times. The significance of the results which are found depends on the respondents a great deal, but still there are few researchers who consider it to be less reliable due to the diversity in human behaviors and their considerations which vary time to time and person to person. In some cases the respondents are also found to be less involved and this make them unreliable source to rely on (Smith & Lynch, 2004).

The second approach is time series approach, in this approach data is collected for a time period and the researcher convert the data in some illustrative form like making trend and then analyze on the bass of results found. Researcher use semi-logarithmic and arithmetic graphs at the time of illustrations this depend upon the complexity of the need. There are so many methods to be adapted when it comes on Revenue Forecasting, like averaging the revenues and assuming that the taxes sources are growing along with that. There are other techniques like moving average methods and attributing greater weight for the more recent revenue returns. Usage of time series data is usually opting by the researcher when the change occurring each year is what the researcher is interested in. Mostly it is seem that these trends are less indicative when the situation is more complex and the fluctuations ...