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Key Topics
- Requirement
- Solution
- Introduction:
- Conclusion:
- Introduction
- Introduction:
- Advantages of the cash system are as follows:
- Disadvantages of the cash system are as follows:
- a) Due to its simplicity, it does not facilitate the tracking of the actual dates of the sales and the purchases that have been made by the company.
- Advantages of the accrual system are as follows:
- Disadvantages of the accrual system of accounting are as follows:
- Conclusion:
- Reference
Requirement
1- Write a report on Manage budgets and financial plans in 2000 words with reference to APA.
Solution
Answer to the question 1.
Introduction:
In the present report, an effort has been made to highlight the process of preparation, presentation and the integration of the budget statement within the operational structure of the entity. For this purpose various aspects of the budget statement will be analysed like by whom the development of the budget takes place, who are being consulted, what are the budgeting methods being currently used etc.
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Person responsible for the development of the budget:
In the present workplace, the budget preparation job has been assigned to the project managers of the company. The reason being that the project manager are the ones that successfully conduct each of the projects of the company and makes sure they are successful. Hence monitoring of the costs incurred and the revenue to be generated corresponding to it must be handled or managed by the project manager of the company (Liou&Nitz 2015). -
The personnel are who are consulted:
For the purpose of preparation of the budget, the project managers of the company continuously consult with the supervisors of the project. The reason being that the supervisors are in direct contact with the various activities that are being conducted within the project. They are the ones who will be in the possession of the requisite knowledge in respect of the costs to be incurred and the revenue that is being presently generated (Farsi&Gazni, 2015). -
The budgeting methods being used:
For the purpose of preparation of the budget the method of standard costing is being used. Under this method, the management of the company makes use of the present data to project as standard performance that must be achieved by the entity in a pre-determined period. After the ascertainment of the standardperformance, the actual performance of the entity is recorded and the same is compared with the standard performance of the entity. In case there is a presence of any sort of deviation, the reason for that is determined and the adequate steps are being taken for mitigating the same. -
The softwares used for the purpose of preparation of the budget:
For the preparation of the budget the accounting softwares that are used for the preparation and presentation of the annual reports of the entity, recording of the various transactions of the entity and storage of the records of the activities that are being concluded by the company, are being used. The reason being that in the modern softwares, the facility for the preparation of the budgets is pre-loaded and it saves a lot of effort and time of the management. -
The budget periods that re going to be used:
For the purpose of preparation of the budget, a period of three months is chosen. The reason for choosing a period of 3 months is that it gives sufficient time for the collection of the requisite data of the performance of the company and enough time to implement the changes prior to recording of any adverse result by the company. -
The ways to communicate with the stakeholders of the company:
The communication with the stakeholders of the company is established only if significant deviation has been seen in the standard performance that had been set up by the management of the company with the help of budgets and the actual results that has been registered by the company for that period. The communication is established with the help of the annual reports of the company.
Conclusion:
The preparation of the budget and the integration of the same in the functional structure of the entity is very crucial for the purpose of ensuring the right kind of monitoring in respect of the cost that are being incurred by the company in its activities and the corresponding revenue that is being generated.
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Introduction
In this report, an attempt is made to calculate the variance of Omar’s Indian Restaurant by comparing the actual result with budgeted figures. The report shows the calculation of the variance and provides an explanation for the same
Answer to question 3.
Introduction:
For the purpose of determination of the amounts that should be recognised in the accounts of the company, there are primarily two methods that are being followed. They are cash system and accrual system. Under the cash system, only such transactions or the amounts corresponding to it are recorded that have been received by the company in cash. Under the accrual system only such transactions or the amount corresponding to them are being recorded in the accounts of the company which have accrued in respect of the company due to the activities that are being conducted by the company.
Advantages of the cash system are as follows:
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a) The cash system of accounting enables the company to avoid paying taxes in respect of the income corresponding to which the amount has not yet been received by the company in cash.
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b) It is beneficial in case of the individuals and the small businesses wherein the cash availability of the entity can be restricted to a significant extent.
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c) It is very useful in case of the companies and the entities that do not maintain huge amount of inventories
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d) It is a great way of tracking the expenses and the expenses of the entity without having to indulge in a significant amount of bookkeeping.
Disadvantages of the cash system are as follows:
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a) Due to its simplicity, it does not facilitate the tracking of the actual dates of the sales and the purchases that have been made by the company.
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b) It does not provide the suitable means for the purpose of matching these transactions with that of the corresponding inventory of the company.
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c) No records in respect of the accounts receivable and the accounts payable are being kept.
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d) As any partial payment that has been made to the entity is not being recorded duel by it, all the records in respect of the amount that is due to the company from other parties are not being recorded by the company (Jochimsen&Thomasius, 2014).
Advantages of the accrual system are as follows:
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a) The matching of the expenses and the revenue that is being generated by the company from its operations always provides us with the most significant and useful business information that is required for the purpose of conducting better business analysis.
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b) The planning process of the entity in respect of its operations becomes very easy as it leads to the accounting of the expenses and the revenue of the company in respect of the specified period of time.
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c) The method utilises the matching concept and this allows the financial statements of the entity to remain unaffected by the cash timing in respect of the business negotiations.
Disadvantages of the accrual system of accounting are as follows:
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a) The rules regarding the recognition of the expenses and the revenue of the company can be difficult to understand for the purpose of recognising the right amount in the financial statements of the entity.
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b) The system can be effectively used by the entities for the purpose of hiding the various weaknesses and the mistakes that are present within the financial statements of the entity.
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c) In case the company has selected to operate with a different accounting system, it will be very difficult for the entity to make the switch to the accrual basis, the reason being that it is more complex than the system already used by the entity for the purpose of reporting its financial statements (Quinn, 2018).
Conclusion:
It is concluded that both the methods have their own respective advantages and disadvantages. The decision in respect of the selection of the method to be followed by the entity based on the factor that which methods best suits its financial needs.
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Answer to question 4.
For the purpose of conducting the analysis data pertaining to the various aspects of the business will be required. The different aspects of the business includes the data pertaining to the sales made by the company during that period, the expense incurred and the distinctive data of the variable costs incurred and the fixed costs that are incurred by the entity (Fiels et al., 2015).
Answer to question 5.
For the purpose of effective implementation of the budget, two of the most significant resource that will be required includes the human resource available with the entity and the softwares or the information technology that is implemented by the entity for the preparation and presentation of the financial data of the company (Deshpande, 2017).
The human resource of the company will be required for the purpose of effective and efficient implementation of the standards that are being set up under the budget.
The software resources will be required for the effective and efficient gathering of the information with respect to the performance that has been recorded in the financial statements of the company.
Answer to question 6.
For the purpose of communicating the facts in respect of the contingency plan for improving the sales, a meeting will be conducted that will be constituted by the project managers and the respective supervisors of the project conducted by the company. For the purpose of supporting them, an effort will be made to include the experts from the field of sales and marketing. With the help of the experienced employees, the entity will be able to increase its sales effectively (Butler et al., 2016).
Reference
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Butler, B., Hewes, J. H., Dickinson, B. J., Andrejczyk, K., Butler, S. M., &Markowski-Lindsay, M. (2016). USDA Forest Service National Woodland Owner Survey: national, regional, and state statistics for family forest and woodland ownerships with 10+ acres, 2011-2013. Res. Bull. NRS-99. Newtown Square, PA: US Department of Agriculture, Forest Service, Northern Research Station. 39 p., 99, 1-39.
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Deshpande, R. (2017). Budget Monitoring and Oversight System in Myanmar.
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Farsi, S., &Gazni, A. (2015). Research Budget and Its Impact on The Quantity and Quality of Research Activities in Universities and Research Institutes1. Spectrum, 4(2).
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Fiels, K. M., Leon, M., &Geene, B. (2015). 2014-2015 EBD# 14.12-FY 2016 Total ALA Budget Request.
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Jochimsen, B., &Thomasius, S. (2014). The perfect finance minister: Whom to appoint as finance minister to balance the budget. European Journal of Political Economy, 34, 390-408.
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Liou, W., &Nitz, L. (2015). Assessing the Impact of a GET Surcharge on Hawaii's Economy: A Response to Testimony from the Department of Budget and Finance on SB 727.
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Quinn, R. E. (2018). Productivity and the process of organizational improvement: Why we cannot talk to each other. In Public Sector Performance (pp. 9-19). Routledge.
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Rietig, K., & Perkins, R. (2018). Does learning matter for policy outcomes? The case of integrating climate finance into the EU budget. Journal of European Public Policy, 25(4), 487-505.
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