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    Entrep MODULE 9

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    stephen allan ambala
    The document discusses financial planning, budgeting, and control. It explains that budgets allow for better planning of expenditures and income projections. Creating an accurate budget involves examining past financial statements and listing all sources of income and expenses. Comparing actual expenses to the budgeted amounts helps businesses control spending and improve future budgeting.

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    Entrep MODULE 9

    Uploaded by

    stephen allan ambala
    13 views3 pages
    The document discusses financial planning, budgeting, and control. It explains that budgets allow for better planning of expenditures and income projections. Creating an accurate budget involves examining past financial statements and listing all sources of income and expenses. Comparing actual expenses to the budgeted amounts helps businesses control spending and improve future budgeting.

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    The document discusses financial planning, budgeting, and control. It explains that budgets allow for better planning of expenditures and income projections. Creating an accurate budget involves examining past financial statements and listing all sources of income and expenses. Comparing actual expenses to the budgeted amounts helps businesses control spending and improve future budgeting.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    13 views3 pages

    Entrep MODULE 9

    Uploaded by

    stephen allan ambala
    The document discusses financial planning, budgeting, and control. It explains that budgets allow for better planning of expenditures and income projections. Creating an accurate budget involves examining past financial statements and listing all sources of income and expenses. Comparing actual expenses to the budgeted amounts helps businesses control spending and improve future budgeting.

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    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
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    Entrepreneurship (Introduction to Bookkeeping and Accounting with Financial Literacy)

    Module Nine: Financial Planning, Budgeting and Control

    JUB
    Entrepreneurship (Introduction to Bookkeeping and Accounting with Financial Literacy)

    Module Nine: Financial Planning, Budgeting and Control

    Now that we’ve learned all of these terms, let’s put some of them to use by explor-
    ing reasons for budgeting, creating a budget, and comparing budgets to actual ex-
    penses. For many of us who have tried to use a budget at home to curtail that in-
    ternet shopping obsession, you have either discovered how difficult it is to stay
    within a budget or how much easier it is to stay within your means, using a budget.

    Reasons for Budgeting


    A budget, in the business world, is like an owner’s plan of action. Such a budget allows for
    better planning of the business’ expenditures which can be matched to the sales revenue. It
    is a set of financial goals which can be used in evaluation of the performance of a business,
    based on whether or not the goals have been met. The budget will also project expectations
    of cash inflow and outflow as well as other items that are often found on a balance sheet.
    Budgets should be used to look back at previous time periods in order to look forward and
    make any changes to future time periods before they happen. A master budget should first
    be developed to include numbers that are based on the expected sales and expenses, and
    should reflect a specific time such as a month, a quarter, or a year. Budgets also allow for
    control of spending, which in turn will help prevent overspending.

    JUB
    Entrepreneurship (Introduction to Bookkeeping and Accounting with Financial Literacy)

    Creating a Budget Comparing Budget to


    Past financial statements are Actual Expenses
    often the best references
    While budgets are a pro-
    when creating a budget. Any
    jected or expected amount
    bank statements, utility bills,
    in terms of spending,
    and records of income and expenses will help. A
    “actual expense” is the realized amount
    list of all sources of income should be kept and
    that was ultimately spent by the end of
    updated at all times. Knowing the possible ways
    the period. Expenditures can easily
    that income might be gained will allow a business
    change from the budgeted amount, and
    to create a realistic budget. It might be helpful to
    revenues (income) might also not reflect
    combine all sources of income and create a grand
    what was previously forecasted. For this
    total for each month and each year. Expenses
    reason, it is important for businesses to
    should be considered as either fixed expenses or
    recognize the differences in their budgets
    variable expenses. A fixed expense is one that usu-
    as compared to their actual expenses. It is
    ally does not or should not change, such as rent. A
    very rare that actual expenses will match
    variable expense is one that may vary from time
    exactly with the budget at the end of a
    to time, such as a utility bill.
    period. However, this does not mean that
    Check the expected monthly income against the budgets are unnecessary; they still pro-
    expected monthly expenses. Do the same for the vide limits and guidelines to spending be-
    year. If the income turns out to be less than the fore the spending actually occurs. Re-
    expenses, adjust your expenses. Eliminate any un- member, it can be hard to stop a spending
    necessary expenses if possible. If the income spree once it has begun (all you shoppers
    equals more than the expenses, great! Plan to should know this quite well) thus, a budg-
    save some of the money your business will have et can aid a business in controlling its
    left after expenses. This saved money can be used spending. Looking at actual expenses and
    if ever the income does in fact equal less than the comparing them to the initially planned
    expenses. Once your budget has been created, expenses can allow a business to improve
    this is not the end. A budget should be reviewed its budgeting plans for the future.
    and updated periodically as changes in income
    and/or expenses occur.

    JUB

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