Preparation of budget
This query is : Resolved
30 November 2013
For theory on what's budgeting and etc, refer to a good book. Following are practical tips:-
1) Budget is a replica of your current Financials (not the Statutory reports, but internal Management reports, commonly called MIS). Only difference is it's for future period.
2) Segregate your P&L in few parts. Eg.
a) Sales & Cost of Sales (Plus Production and Purchase volumes). This data is critical to be fixed as soon as possible. Make sure these don't change at later stage. All of the things that will follow are dependent on this.
b) Sales Dependent Values (eg. Commission, Warranty, Discounts, etc.) Mostly, for this you calculate as a %age on Sales.
c) Departmental Expenses (this you will get from Department heads of various functions. This includes Travelling, Telephone, Electricity, etc).
d) Payroll Costs (salary & benefits). This will be a confidential data, because the increments and promotions will also get in here. Keep it Confidential.
e) Inventory, Fixed Assets, Receivables, Payables, etc. These are dependent on Sales, Production and Purchase volumes. They can be calculated as %age or through Increment/Decrease in closing values.
f) The balancing. you will have to do a balancing in some Balance Sheet GL. Also, it should not be a large figure.
Final Key point to note is:- keep in mind that your budget is for comparison with actuals in next month / year. So, keep it in such manner where you can effectively analyse and compare with actuals.
Hope this helps.
1) Budget is a replica of your current Financials (not the Statutory reports, but internal Management reports, commonly called MIS). Only difference is it's for future period.
2) Segregate your P&L in few parts. Eg.
a) Sales & Cost of Sales (Plus Production and Purchase volumes). This data is critical to be fixed as soon as possible. Make sure these don't change at later stage. All of the things that will follow are dependent on this.
b) Sales Dependent Values (eg. Commission, Warranty, Discounts, etc.) Mostly, for this you calculate as a %age on Sales.
c) Departmental Expenses (this you will get from Department heads of various functions. This includes Travelling, Telephone, Electricity, etc).
d) Payroll Costs (salary & benefits). This will be a confidential data, because the increments and promotions will also get in here. Keep it Confidential.
e) Inventory, Fixed Assets, Receivables, Payables, etc. These are dependent on Sales, Production and Purchase volumes. They can be calculated as %age or through Increment/Decrease in closing values.
f) The balancing. you will have to do a balancing in some Balance Sheet GL. Also, it should not be a large figure.
Final Key point to note is:- keep in mind that your budget is for comparison with actuals in next month / year. So, keep it in such manner where you can effectively analyse and compare with actuals.
Hope this helps.
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- CG Tax On residential property
- Applicable TDS for Purchase of Flat from NRI
- Claiming exemption of perquisite for employee-owned car under New Tax Regime in ITR-2
- Pass word to open justification report for Q1 for FY 2026-27
- Gift of mutual fund units to daughter
- PPF interest-As Exempt Income disclosure
- Under construction property in ITR
- Not able to file ITR
- Building tax payment deduction in rental Income
- NRI ITR2 account in 2025-26 ,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,.
- PF Taxable Income
- Clarification on Tax Audit Applicability and Reporting of F&O Transactions in ITR-3
- Interest credited in FY2025-2026 & TDS therein by EPFO does not reflect in AIS or Form 26AS
- 44ad eligble money lending interest
- Delisted shares sold in off market/ Rebate u/s87A
- In Exports Sales HSN details where to fill
- Opting out" of regime provided under subsection (1A) of Section 115BAC but Form 10IEA is not filed.
- Difference in tax comparison report
- Gst invoice numbering and delivery challan numbering
- Sales amount in Gstr1
Trending Online Classes
-
DT & Audit (Exam Oriented Fastrack Batch) - For May 26 Exams and onwards Full English
CA Bhanwar Borana & CA Shubham Keswani
Subscribe to Pro
Join an elite circle of professionals
CAclubindia
