managing-budgets

In one view you could say that the budget is a

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Unformatted text preview: otal of these changes will occur over the budget year, and the financial reports you create during the year tell you how on-target your predictions were. 3.3 Chart of Accounts The tool used to track the changes described above is the Chart of Accounts. A business has specific accounts within their chart which correspond to the assets and liabilities that the organization has. For example, some accounts in the chart of accounts for a temporary agency might be: Assets: o Cash o Accounts Receivable o Equipment Download free ebooks at bookboon.com 18 Financial Information Related to the Budget Managing Budgets Liabilities: o Salaries o Benefits o Advertising o Accounts Payable However, there are usually dozens – if not hundreds – of accounts under both assets and liabilities. It depends on how the organization tracks all of their finances. For example, if you work for a large corporation with multiple departments, you will have more accounts in your Chart of Accounts than if you are a one-man consulting firm. In conventional accounting, all of the accounts the company uses are grouped together by like categories and then are numbered according to a standard format. The conventional numbering system is: Assets 101 – 199 Liabilities 200 – 299 Equity 300 – 399 Revenue 400 – 499 Expenses 500 – 599 Some organizations might use 600s for expenses. And an organization can also add account identifiers to further subdivide an account. For example, you could have an expense account 501 for “utilities” and add identifiers for each utility so that it might look like this: 501001 – Gas 501002 – Power 501003 – Water 501004 – Waste Disposal Download free ebooks at bookboon.com 19 Financial Information Related to the Budget Managing Budgets Or, an organization with multiple departments that also budgets and tracks expenses by departments could use sub-identifiers to denote an expense for each department. So, for example, perhaps all utilities for the organization start with a 501, then all t...
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This note was uploaded on 06/07/2013 for the course BA 201 taught by Professor Cuongvu during the Fall '13 term at RMIT Vietnam.

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