BUDGETING

Budgeting



Budgeting

Introduction

Budge is called the advance estimate of revenues and expenditures of an economic activity (personal, family, business, company, an office, a government) for a period, usually annually. It is a plan of action to meet a target, expressed in financial terms and values that must be met by a certain time and under certain conditions laid down. This concept is applied to each responsibility center organization. The budget is the annual development tool companies or institutions whose plans and programs are formulated within a year. Budgeting enables companies, the governments, private organizations or families set priorities and evaluate the achievement of its objectives. The aim of this paper is to evaluate the statements given with reference to budgeting in UEL.

Discussion

Explain the relevance of the above statements to the current situation at UEL.

An organization's budget serves as a guideline in planning and committing costs in order to meet tactical and strategic goals. Tactical goals such as providing budgetary costs for daily operations, and strategic objectives that include R&D, production, marketing, and distribution are all part of the budgeting process. Serving as a guideline rather than being set in stone, the budget is a snapshot of manager's "best thinking at the time it is prepared" (Marshall, 2003, p.496).

The budget is a method in which to reign-in discretionary spending, and will likely show variances between what costs have been anticipated and what costs are actually incurred.

In current situation of UEL, the forecasted information can help manager to make the future forecast for the expenses. The management can organize its resources to overcome any financial deficit that may occur in the future (Clinton and Anton, 2006, 9-12). The budgetary information that have been provided to the newly appointed management will assist him allocate the resource of the college according (in three departments, humanities, life science and languages) and therefore increase the profitability of the college. Keeping a budget helps UEL remain on top of its finances. Understanding where the money is coming from and where it goes is the most important element in staying out of debt and using the money it has to best advantage.

Zero Based Budgeting

Definition

“It consists of reassessing each of the programs and expenditures, always starting from zero, i.e. it prepared as if for the first operation of the company, and evaluates and justifies the amount and need for each item of the same. He forgets the past to plan the full awareness future”. (Sullivan and Sheffrin, 2003, 502)

The process of making a budget based solely on the expectations for the year next, without reference to previous years without historical database, also in new operations that are different standards of the company. When companies are spending more than necessary or excessively, is made ??zero-based budget for redirect resources more effectively. The zero-based process provides detailed information about the money needed to achieve the desired results, focuses attention to the necessary capital for the programs in place for focus to the percentage increase or decrease the previous year (Sharman, 2003, ...