Essay - Accounting/finance 1. Identify the Stages of the Budgeting Process and...

Accounting/Finance

*****. Identify the stages of ***** budgeting process and evaluate their effectiveness.

***** are four stages in most ***** processes. The first stage is ********** gathering. At this ***** past performance results are collected and assessment is made ***** the company's strategic plans. Performance results for the previous year are ga*****red, the ***** current objectives are defined ***** the market in which ***** company operates is evaluated. Some companies also ********** customer feedback in ***** information gathering tasks.

***** is the second stage, with determinations made about how detailed the budget will be and how it will ***** organized, whether by department or product or other groupings.

Preparing the ***** is the third *****. The inf*****mation obtained in stages one and two ***** converted to numerical values. Finally, financial projections are created concerning revenue expectations, projected expenses and any capital expenditures included.

***** is sometimes not considered part of the budget process; *****ever, because the results are recorded all ***** and, at year-end if not before, variances are ********** ***** assessed, it becomes part ***** the continuing budget process for the following year's budget as well.

Some say that one is only as good as the information one h*****; in ***** sense, properly collecting ***** for the budget process ***** likely to be the single most effective component in creating a successful budget. Pl*****nning, however, is equally important: it is the aspect that creates ***** uses for the in*****mation gathered in the first stage. If stages one and two are ***** completed, stage three should easily fall into place. Control is one facet that needs 'hands on' attention; if ***** ***** properly carried out, however, it can make the next ***** budget even easier to prepare and more seamless ***** carry out.

2.Evaluate ***** level ***** validity of detailed assumptions used to create budget estimates.

Assumptions are, ***** their nature, representations of the unknown. Because of this, it is important to base those assumptions on ***** most reliable informati***** available so that fear of error can ***** minimized and planning can proceed. ********** are several "necessary assumptions," such as sales levels, gross margins, accounts receivable levels, bad debt percentages ***** ***** on) that *****not be known but cannot be relatively reliably projected based on input from key people. One way to test the ***** would also be to ask ***** key *****on providers how ********** intend to improve their department in the com*****g year, and then determine whether their plans are realistic based on the information *****y have provided. This ***** also help budget preparers ***** document the factors on which assumptions used in budgeting are *****.

3. Discuss the role of the budget as an analytic tool ***** can ***** used to evaluate organizational *****.

Budgets create, first of all, leverage ***** pressure business units to improve; *****y can also be used to ***** whether or not departments have improved.

In addition, "the budget process has always been ***** always will be the ***** where everyone raises questions