Budgeting Concepts, Policy, Process and Beyond

Budgeting Concepts, Policy, Process and Beyond - Session ONE

Section 1 – Budgeting Concepts Page

Budgeting VS. Accounting 4

Budget Definition 5

Advantages of Budgeting 6

Disadvantages of Budgeting 7

Uses of Budget 8

Why Plan? 9

Understanding Where Your Budget Fits In 10

Why Budget? 11

Decision Making 12

Budget Committee Decision 19

Budget Period Decision 20

Parts of a Budget 21

Types of Budgets 22

Ratio Analysis 29

Budgeting Tips and Tricks 36

Understanding Where Your Budget Fits In

Your budget should flow down from your company’s plan, like this:

Types of Budgets

Main Types of Budget

Capital Budget

Cash Budget

Expense Budget

Labor Budget

Production Budget

Sales Budget

Ratio Analysis (3/7)

Current Ratio

Quick Ratio

Ratio Analysis (4/7)

Debt Ratio

Gross Profit Margin

Ratio Analysis (5/7)

Return on Sales Ratio

Debt to Net Worth Ratio

Ratio Analysis (6/7)

Cash Turnover Ratio

Collection Ratio

Ratio Analysis (7/7)Return on Investment

Section 2 – Budgeting Policies and Procedures Page

Budgeting Procedures - Intro 40

Formulation of the Budget 41

Budget Variance Reports 47

Subsequent Account Changes 49

Budgeting Tips and Tricks 52

Section 3– Budgeting Process Page

Definition Of Budgeting Process 55

The 6 Steps Of a Budgeting Process 56

Where Can You Get your Numbers From? 71

Getting Your Budget Approved 74

Monitoring and Managing Budgets 75

Budgeting Tips and Tricks 77

The 6 Steps Of a Budgeting Process

The budgeting process typically has six steps.

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