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Introduction to Budgets

Introduction to Budgets - forward and to anticipate changes...

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Introduction to Budgets Budgets are part of a company's long-range planning system. While some portions of a long-range  plan are concerned with the organization in five to ten years, the  budget  is the short-range portion of  the plan. Most budgets are prepared for a twelve-month period, sometimes on a rolling basis. A  rolling budget  is updated quarterly (or as often as management requires the data) by dropping the  three months just ended and adding one quarter's data to the end of the remaining nine months  already budgeted (see following figure). Rolling budgets require management to keep looking 
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Unformatted text preview: forward and to anticipate changes. The master budget consists of all the individual budgets required to prepare budgeted financial statements. Although different textbooks group the budgets differently, the main components of a budget are operating budgets for revenues and expenses, capital expenditures budget, cash budget, and finally the budgeted financial statements, which include the income statement, balance sheet, and cash flow statement....
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