BUDGET

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Arun Iyer (Querist)
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09 July 2010 DEAR ALL,

HOW TO PREPARE BUDGET

WHAT IS A PROCEDURE FOR PREPARING BUDGET

WHAT ARE THE STEPS ARE INVOLVED IN PREPARATION OF BUDGET.

WITH THANKS

K A K

CA SMR

CA SMR (Expert)
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10 July 2010
Budgets may be divided into two basic classes: Capital Budgets and Operating Budgets.
Capital budgets are directed towards proposed expenditures for new projects and often require special financing. The operating budgets are directed towards achieving short-term operational goals of the organization, for instance, production or profit goals in a business firm. Operating budgets may be sub-divided into various departmental of functional budgets.
Different types of budgets are prepared for different purposed e.g. Sales Budget, Production Budget, Administrative Expense Budget, Raw-material Budget etc. All these sectional budgets are afterwards integrated into a master budget, which represents an overall plan of the organization.

The Budgetary Control process include,
1. Preparation of various budgets.
2. Continuous comparison of actual performance with budgetary performance.
3. Revision of budgets in the light of changed circumstances.

Steps in brief:

1. Budget Manual: A document which setout, inter alias, the responsibilities of the persons engaged in, the routine of, and the forms and records required for, budgetary control.
2. Table of Authority for obtaining the necessary approval of budgets, the authority of granting approval should be stated in explicit terms. Whether one, two or more signatures are to be required on each document should also be clearly stated.
3. Timetable for all stages of budgeting.
4. Reports, statements, forms and other records to be maintained.
5. The accounts classification to be employed. It is necessary that the framework within which the costs, revenues and other financial amount are classified must be identical both in accounts and the budget department.

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Arun Iyer

Arun Iyer (Querist)
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12 July 2010 Thank you Mam

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