Budgeting

659 Words Sep 21st, 2013 3 Pages
Irina Vanessa Lintermanns Verschüer
A01200345
September 26, 2011
Homework: Questions of budgeting

1. Discuss some of the major benefits to be gained from budgeting.
It motivates the executives to define the basic objectives of the company, it gives a structure to the company by defining the responsibilities of each of the parts that forms the organization, it motivates and rises the participation of all workers of the company, it obligates to maintain a control document with historical data, it facilitates managers the use of resources, and it gives periodic evaluations and analysis.

2. What is meant by the term responsibility accounting?
It explains that a company must be decentralized or separated into manageable parts.
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Who are the participants in the budgeting process, and how do they participate?
First the management must choose a period of time for which the budget will be used; the most convenient period is of one year. A period can also be of one month in which it is easier to compare the real expenses against the planned expenses. A committee of budgeting formed by several members of the organization executives watch the process of the preparation of the budgeting. This committee sets the rules by which the budgeting must be done and coordinates the budgets that separately are prepared by the different units in the organization, and solves conflicts that may arise to later present the final budgeting plan to the general director and the consul. Instructions must be delivered by the ordinary chain of command. Decisions over the budgeting must be done by the line of command, and the final planning by the general director, while the staff can only give advises, but cannot decide. The person who decides is the budgeting director. His main functions are to inform the mechanism of the budgeting preparation through computers and telecommunications, to give the macroeconomics information, make the necessary calculations, gather the numbers for the budget, and watch that each part of the company gives their proposals on time. Once the period of time is established, the committee must listen to the companies’ expectations and objectives. Then a manual that contains the specific
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