BUDGETING PART 1

BUDGETING PART 1

1. Business Planning

   • Development of business goals
   • Setting of objectives

2. What is a budget?

   • Forecast of future events expressed in financial terms

3. Purpose

   • Controlling
     • Comparing performance with budget
   • Planning
     • Setting financial targets for business
   • Communicating
     • Set targets that employees can be motivated to strive for

4. Master Budget

   • Summary of company's plans that set specific targets
     • Represents a comprehensive expression of management's plans for the future
       • Cash budget
       • Balance sheet
       • Income statement
   • Covers a 12 month accounting period
   • Purpose
     • To show business owners and managers a complete overview of the planned business activities and changes