Budget Vs. Comprehensive Budget

For example interest rates, the cost of raw materials including fuel, the number of sales or orders that we make and in turn all of these rely on other factors. The best therefore that can be done when developing a budget is to look at all the factors that are likely to affect the budget and decide how to take account of each one. If there is a previous budget (last year or last month) then it is sensible to look at how this has been achieved or not as the case may be, and what factors affected the outcome. If we are looking at monthly budgets it might be a better comparison to look at the same month twelve months ago as well as the previous months. The more factors we take into consideration when estimating a budget, the more accurate our budget will be.

These decisions may include selling and buying of stocks, bonds, futures, currencies and so on. Stocktrak.com helps to implement the investment decision process as it includes evaluation tools for securities being traded at stock market. The website provides graphical historical performance of stock prices and this graphical performance can be analyzed for making different investment decisions related to those stocks. This project will be investing the given specified amount in a portfolio. The portfolio investment will help to reduce the level of risk associated with investment. With the reduction in level of risk, the average return of portfolio investment will increase as compare to individual investments. Thus, portfolio investment is better option for investment as compare to individual

There are different types of budgeting that businesses typically use and those include Operating budgets, Capital Budgets and there are many subtypes that exist because a budget can also be created for special events, the recruitment and retention of new staff, and to manage the advertising expenses and return on investments for a business (Demand Media, 1999-2012). According to Demand Media (1999-2012), "An operating budget outlines the total operating expenses and income for the organization, typically for the period of a fiscal year. Capital budgets evaluate the investments and assets of the business, and a cash budget shows the predicted cash flow in and out of the business over a period of time” (para.2 ). According to the Cost-Benefit Analysis (2012), “Capital budgeting has at its core the tool of cost-benefit analysis; it merely extends the basic form into a multi-period analysis, with consideration of the time value of money. In this context, a new product, venture, or investment is evaluated on a start-to-finish basis, with care taken to capture all the impacts on the company, both cost and benefits. When these inputs and outputs are quantified by year, they can then be discounted to present value to determine the net present value of the opportunity at the time of the decision” ("Cost-Benefit Analysis," 2012).

Capital expenditure budget. This budget is needed when an organization needs to invest in major projects and equipments, such as purchases of new products, new information technology systems, in which a management team will conduct a financial evaluation to determine whether the company’s return on investments will be met (Halliman, 2006).

Capital planning and budgeting is a very vital piece in the Public Budgeting System process. It is an essential implement in the financial management practice and is effective in both public and private organizations. It is the method which consists of the determination and the evaluation of the investments and the possible expenses by an organization. As explicate by Lee, Johnson, & Joyce (2008), capital budgets help in determining how much of each form of investment is needed, and it supports an organization in assessing the available revenue which includes loans is required to finance those investments (p. 475). Capital budgeting is a central part of the universal

A budget requires an organized layout that categorizes revenues and expenditures within particular funds to account for operations, administration, student services, salaries, benefits, transportation, and curriculum development, to name a few. The four funds for budgeting are the General Fund (10), Special Revenue Fund (20), Capital Fund (30), and the Debt Service Fund (40). Categorizing items into funds facilitates the budgetary process by grouping revenues and expenditures to compare expenses and make adjustments to meet educational goals as needed.

In outlining a budget there are two phases that must be determined to create a budget, an operating phase and a financial phase. “Developing a new operating budget starts with examining budgets from previous years and identifying what components are going to change, by how much and if any new components need to be added or existing ones reduced or cut” (Budget Challenges, 2012). In the first phase of the budget it needs to be determined how much money is going to be needed to operate the day to day activities of the business.

The budgeted income statement, cash flows, and balance sheet follow in order. The income budget relies on the revenue and expense forecast from the operating budget, while the budget cash flows are planned for financial and investment activities. A final component of the budget process, the projected balance statement, can be used to tie in all the budgeting dependencies. Once a budget has been prepared, evaluation can be expected before approval. Budgetary components may require several iterations before finalizing the organizational budget.

Budget is the major financial and economic statement. The role of the budget is to keep track of the money coming in and the money going out. It is essential part of running any business effectively. It can help make a short and long term projections about financial situation, avert a financial crisis and plan for major financial changes.

One component of the comprehensive budget is the operating budget. This component looks at short-term goals and consists of income and expenses that are recurring. All sources of income are included, as well as all recurring living expenses. The frequency of each occurrence must be considered, since not all recurring income and expenditures occur monthly. An annual operating budget captures all activity for the year, including those that occur with less frequency. Vehicle insurance may have a semiannual

Another type of budget is the capital expenditure budget, which reflects expenses related to the purchase of major capital items (Stafford, 2007). Capital items are those that have a useful life of more than one year and must exceed a cost level specified by the organization such as $1000. If the item is below this cost, it is considered a routine operating cost. Capital

Budgeting is crucial in the well-being of a company especially the financial health status of a company. In fact, no professionally managed firm would fail to budget, since the budget establishes what is authorized, how to plan for purchasing contracts and hiring, and indicates how much financing is needed to support planned activity. It is routine for a company to budget for its expenses. Expense budgets act as a guideline of how much revenue a company would require keeping the activities running. It is used to set the company’s targets for a certain period.

Looking at the analysis above, cash budget is important for Doomy Corporation to have, because it ties all of the rest of Doomy’s planning down to numbers and also timing. Also it is the roadmap where they believe they want to go so it helps them set goals in terms of what revenue

You can only take the right financial decisions if you understand the need for using a tool for rightly tracking your financial activities. There are many points that stress on the need for using financial activity tracking. Some of the important ones are the following:

Budget and budgetary control practices are undeniably indispensable as organizations routinely go about their business activities and operations. These organizations are constantly on the alert on how actual levels of performance agree with planned or budgeted performance. A budget expresses a plan in monetary terms. It is prepared and approved prior to a particular budgeted period and explicitly may show the income, expenditure and the capital to be employed by organizations in achieving their goals and objectives.