Start networking and exchanging professional insights

Register now or log in to join your professional community.

Follow

What is budget and what is the starting point to initiate the budget?

user-image
Question added by Muhammad Faheem , Consultant- Accounts, Audit & Taxation , Basim Associates
Date Posted: 2013/11/26

Hello Muhammad,

 

I am sorry that I couldn't get to you earlier with this one, but since Youssri has detailed a very beautiful explanation, I'd like to go with him.

 

Thank you!

 

NC.

Jithin P J
by Jithin P J , Financial analyst / Accounts Manager , Sharjah cricket Stadium

it is an estimate of Income and Expense for a perticular period or perticular activity

Aziz ur Rehman ur Rehman
by Aziz ur Rehman ur Rehman , Assistant Manager Finance , Central Power Puchasing Agency (CPPA)

Budget 

"It's like a roadmap for your company"

 Drafting a budget is a key way to help you turn your dreams for business success into reality.

 

Starting point to initiate the budget

A budget should include your revenues, your costs, and -- most importantly – your profits or cash flows

So, obviouslly the revenue needed (interms of total units and  unit prices) for the future requirement is the starting point of the budget

 

Youssri Malek
by Youssri Malek , Chief Financial Officer CFO , Yangon Door2Door

As previously mentioned, it is the financial expectation of a certain period for the organization.

The major part is estimating the income statement, therefore the starting point is usualy the expected revenue. Fianancials and budget experts can have their budget estimation, and challenge any planned estimation, however, I personally always stress that the revenue expectation should be decided between sales/marketing team and the top managment. After estimating the revenue you can start estimating the cost, I also prefer to built it on fixed / variable cost principle.

Some companies end the budget by the income statement, but you can also add expectations to balance sheet, and cash flow.

Best of luck.

MOHAMED RABIE KHALILL
by MOHAMED RABIE KHALILL , رئيس حسابات , شركة ترانز لاين

I agree with all the answers

mukkur srinivasan varadhan
by mukkur srinivasan varadhan , Chartered Accountant , Chartered Accountant in practice

Budget is the expectation of the Management .,goal to be achieved in a particular period of time.This goal is financial, whever applicable quantitative .This is the overall direction in which Management expects the company to move to achieve the desired results.Budget comes into force after approval of the Management. Desired financial result can be the starting point for setting budgets.Then back working is required like revenue budgetted, expense budget.Then correspondingly quantities to be achieved.Then making correction for realistic values.;

More Questions Like This