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
- Is this income indian or foreign income?
- REGARDING GST ON COMMERICIAL PROPERTY
- 15ca /15cb whose income tax login? remitter or nri seller's login?
- Regarding Documentation & Compliances for Opening of Unit of Pvt Ltd.
- ITC temporary reversal and reclaim
- GST on export of services and Input Credit
- TDS U/S. 194NF
- RCM applicability on Rent Paid by Registered Person to Unregistered Landlord for Residental Building
- Applicable TDS rate for sale of property in Nov 2024
- Capital gain consideration
- MIS MATCH OF INVOICE NUMBER
- VERIFICATION OF REFUND RELATED
- GST Regis.
- ITC c/f from FY2022-23 to FY2023-24 entered the same in table 8C of GSTR9 of FY 2022-23, in FY23-24
- Late filling fees Demand by gst office
- IGST Credit-Show cause notice issued-confusion
- Short and Excess provision of expenses
- Issue of gst e invoice
- Interchangeable words in accounts
- Adjusted profit/Loss in the case of LLP and Pvt. Ltd.company
Trending Online Classes
CAclubindia
