Financial planning and budgeting

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Information about Financial planning and budgeting

Published on March 13, 2014

Author: emilyjeanomandam



 - is the long term process of wisely managing your finances so you can achieve your goals and dreams while at the same time negotiating the financial barriers that inevitably arise in every stage of life. It is a process not a product  Sound financial plan  1. establish goal  2. Gather data  3. analyze and establish your financial status  4. Develop a plan  5. Implement the plan  6.Monitor the plan and make necessary adjustments

 Financial statement preparation and analysis( including cash flows, analysis/planning and budgeting  Insurance planning and risk management  Employee benefit planning  Investment planning  Income tax planning  Retirement planning  Employee benefit planning

 Is the process of planning, adopting, executing, monitoring, and auditing the fiscal program for the government for one or more future years  - means for planning and controlling activities at every level of the organization.  The local budget process is the core of the system of fiscal administration.  Budgets- are formal quantitative statements of the resources set aside for carrying out planned activities over a given period of time. a. hiring and training personnel, purchasing equipment, manufacturing, advertisement and selling. b. establish a clear and unambiguous standards of performance for a set time of period

 output inputs output-input  Responsibility center- any organizational function or unit whose manager is responsibility for all its activities.  Revenue center- unit in which output are measured in monetary terms. Ex. Sales department  Expense center- administrative service and research departments where inputs are measured in monetary terms but outputs are not. Ex. Maintenance, administration, service and research department  Profit department- is measured by numerical differences between revenues and expenditures  Investment center-measure and compare output with assets used in producing them Revenue centers Expense centers Profit centers Investme nt centers Outputs compared with assets

 Begins with the forecast, sales and profit objective for the coming year by top management.  Top-down budgeting vs. Bottom-up budgeting Budget are imposed are imposed by top managers with little or no consultation with the lower level manager Are prepared by those who must implement them. The budget are sent up for approval to higher-level managers for approval.

 1. Budget Preparation- the plan is used to determine expenditure and sectoral ceiling; to formulate the function/project activities and to determine cost estimates  2. Budget and review- the plan is used to verify the consistency of the budget with the approved activities  3. Budget execution- the plan is the basis for determining the activities to be undertaken  4. Budget accountability- the plan sets the standard against which the performance can be measured.  Source: DBM

 1. Operating budget – a. expense- engineered cost and discretionary cost b. revenue – are meant to measure marketing and sales effectiveness c. profit budget- called master budget- consist of set of financial statement and schedule for the coming year(combine cost and revenue 2. Financial budgets- spell out the detail the money the organization intend to spend in the same period and where the money will come from

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