REPORT ON FINANCIAL ACTIVITY

Part 2: Budget Process

Part 2: Budget Process

Introduction

Organizations use budgets for planning their future activities and for setting different targets and goals within the business. They facilitate the businesses set specific prospects that aid in analyzing the performance of the firm. Every organization set their budget process, and each implements particular strategy to meet their budgeted targets and goals. In addition, it is essential to note that budgets are estimates and therefore they are required to be adjusted over the time (Bonham et al, 1998, p.144). This paper is focused on a budget process of SBC Retail by illustrating significant aspects of its budgets.

Type of Budgets

SBC Retail prepares several types of budgets in order to adequately plan and set objectives. Among the major types of budgets, the company prepares sales budget, production budget, marketing budget, cash flow, budget, income statement, balance sheet, etc. Thus, the company prepares and uses operational as well as financial budgets. Operational budgets represent the products and services that the firm expects to consume in the budgeting period. On the other hand, financial budgets indicate comprehensively the money that the firm intends to spend in the budgeting period as well as how they will obtain that money (Rao, 2009, n.d). Thus, both operational and financial budgets are prepared by the SBC Retail. In addition to statistic budget, the company also develops flexible budget that includes the changes made along the way. Hence, operational as well as financial types of budgets are used by the SBC Retails, and besides the static budgets, the company also use flexible budgets to incorporate the changes occurred during the budgetary period.

Budget Process Commencement

The budget process in SBC Retail mainly starts with the communication from the main authorities (centre) as to what budget policies are set ...