Ugh, budgeting is one of those topics we'd rather avoid, but in business, it's an absolute necessity. To prepare a reasoned and thoughtful budget, an accountant must start with a broad-based critical analysis of the most recent actual performance and position of the business by the managers who are responsible for the results. Then the managers decide on specific and concrete goals for the coming year. It demands a fair amount of management time and energy. Budgets should be worth this time and effort. It's one of the key components of a manager's job.

To construct budged financial statements, a manager needs good models of the profit, cash flow and financial condition of your business. Models are blueprints or schematics of how things work. A business budget is, at its core, a financial blueprint of the business. Budgeting relies on financial models that are the foundation for preparing budgeted financial statements. Those statements include:

--Budgeted income statement (or profit report): This statement highlights the critical information that managers need for making decisions and exercising control. Much of the information in an internal profit report is confidential and should not be divulged outside the business.

--Budgeted balance sheet: The connections and ratios between sales revenue and expenses and their corresponding assets and liabilities are the elements of the basic model for the budgeted balance sheet.

--Budgeted statement of cash flows: The changes in assets and liabilities from their balances at the end of the year just concluded to the projected balances at the end of the coming year determine cash flow from profit for the coming year.

Budgeting requires good working models of profit performance, financial condition, and cash flow from profit. Constructing good budgets is a strong incentive for businesses to develop financial models that not only help in the budgeting process but also help managers in making strategic decisions.

Want to learn more? Check out "FINANCIAL FREEDOM: A Wealth Manual For The Middle Class" by Dr. Bryan Stoker free online at

And don't miss more than 770 ways to slash your bills with our online home study course, "MONEY SECRETS". Check it out at


Translate Page Into German Translate Page Into French Translate Page Into Italian Translate Page Into Portuguese Translate Page Into Spanish Translate Page Into Japanese Translate Page Into Korean

More Articles



Search This Site


Related Products And FREE Videos


More Articles

Financial Fitness Checklist

... visits to the doctor or dentist because you can't afford them? 9. Has a collection agency called recently about overdue bills? 10. Are you working overtime or holding a second job to make ends meet? 11. If you or your spouse lost your job, would you be in financial trouble right away? 12. Do you worry about money a lot? If you answered "no" to all questions on the Financial Fitness Checklist, you're ... 

Read Full Article  

Im Too Young, Im Too Old, Im Almost Old Enough,

... questions are important for you to think about in order to have solid retirement planning. Once you have answers to these questions, then proceed to start your retirement savings now! What are some of the areas I can invest my money in for retirement? Stocks, bonds, certificate of deposits, mutual funds, 401K, IRA, Roth IRA, annuities and many other miscellaneous investment vehicles. Where can I expect ... 

Read Full Article  

Free Money For Your Retirement?

... and that you can deduct your 401(k) contributions from your income. In this case, the actual monthly out-of-pocket amount you need to come up with equals $200, not $450. To make this calculation, you multiply your share of the needed monthly savings, $300 in this example, by 1minus the 33% marginal tax rate, which equals 67% In this case, the actual amount you need to come up with on a monthly basis ... 

Read Full Article  

Basic Tips On Personal Finance

... card receipts to find expenditures that recure every month and expenditures that happen less frequently. Personal finance budgeting requires some small sacrifices. To be able to make good personal financial decisions and set priorities, you must know where your money is actually going. Start your budget and accomplish your goals. Get an electronic bill pay. This is a very convenient way to pay your ... 

Read Full Article  

Basic Financial Information Tips (Part II)

... recover their funds which have been deducted from their account. Financial institutions have several defenses including consumers negligence. Bounced checks. To avoid costly bounced checks, tie your checking account to a revolving line of credit (an empty loan). If you have such a pre-arranged plan, and write a check for more than your available balance, a loan advance is made to pay the check. If you ... 

Read Full Article