Another key aspect of mgmt. reporting is budgeting

A budget is a financial plan of future revenues and expenses for a specific period of time in the future.

The process for developing the financial plan is called budgeting.

A budget is based on:

The company’s past and current performance

Knowledge of future business plans

External factors

Qs: We have all heard the term budget before, can anyone explain what they think it means?

Go through bullet 1

Budgeting – process of developing a plan, which exams financial elements and forecasts future results

-Current performance

-Knowledge of future plans

-External factors – need to analyze both known and unknown

The budget lays out the financial plan for the following year (or period) and drives decision making

Historical financial data is generally used as a base for prospective budgets

Budgets are created in advance of the period

Let’s say we are creating a budget for 2023, when do you think it should be completed?

Let’s say we are creating a budget for November 2022, when do you think it should be completed?

Go through bullets 1-3

Qs: Let’s say we are creating a budget for 2023, when do you think it should be completed?

Qs: Let’s say we are creating a budget for November 2022, when do you think it should be completed?