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Topic 3: Financial Planning and Control - Coggle Diagram
Topic 3: Financial Planning and Control
Definition of budget:
Budget is the overall plan of a business expressed in financial terms.
Purposes for budgeting:
Decide for the business
Exercise control over the business
Plan the business
The budgeting process
Operationalise strategies
Allocate responsibility
Audit resources
Prepare budgets
Define objectives
Approve budgets
Act to control the event
Implement budgets
Measure performance
Methods of Budgeting
Continuation
budgets compiled on the basis of no change in policies or priorities; business as usual.
Zero based budget
starts budgeting with the priorities of an organization and allocates resources to those priorities according to their order of importance.
Comparing actual and budgeted
Definitions
Actual
supportable by audit trailed documentary evidences such as invoices, receipts, staff time sheets etc.
Budget
approved budget for a given financial period.
Total
sum of actual figures.
Variance
difference between total and budget.