The paper "Accounting and Budgeting Process in Business" Is a wonderful example of a Business Case Study. The use of both the accounting and the budgeting process any business cannot be undermined. This importance is especially true for small and medium-sized companies and startups. The accounting process, by definition, includes the procedures and principles applied by a business to collect and process information useful in the planning of the business activities. At the very least accounting deals with the classification and recording of transactions for the business. This choice of these procedures influences the efficiency with which the business is run and the ultimate performance of the business.
Managerial accounting requires that all businesses have accounting systems in place for the decision making purpose and the fulfillment of the requirements put in place by the respective governments. Given that managerial accounting is concerned with the planning activities of the business as well as controlling of these activities, such procedures are critical in the overall execution of the objective of managers and /or the organization. The accounting process is considered a means to hold the managers as well as other members of staff accountable for the business activities in any given period. A budget, as defined by Finkler et al (2007), is a documented plan that acts as the roadmap for an organization to carry out its activities within a specific period of timeline.
The budget process as a whole, therefore, includes the preparation, implementation, and controlling of the budget estimates. The budget is usually seen at the center of any planning made for the business with regards to expenses and incomes and potential risks and pitfalls in the course of the business.
The principal role and importance of the budgeting process are that it provides an opportunity for the business to set, adapt, and achieve its goals (Finkler et al 2007). Budgeting also contributes to the efficiency of the organization: managers fully acknowledge their resource capacity and deficiency ensuring that they do not operate beyond their capacity. The budget is also important in acting as the coordinating, motivation, communication, and controlling tools for the business especially given that the budgeting process occurs at all levels of management.
As a coordinating tool, therefore, a budget serves to review the activities and outcomes of each of the units in the business in the overall performance of the company. The budget is viewed as a motivating tool as it works as the guideline with which the staff operates to achieve their departmental objectives. Moreover, the motivational factor of the budget is found in the ability to measure the set goals using performance indices or other measures. The budget serves as a way to evaluate the performance of the staff in line with those measurable objectives and the target sets for each individual or department. These purposes are more profound when it comes to a small and medium business or a startup.
Startups need an effective budgeting process for the purpose of resource allocation and reducing expenditures, plan for their future growth as well as creating a roadmap through which the growth can be achieved. Therefore a budget process determines the revenue model, the marketing and advertising plans, and cash requirements before launch, capital requirements, and the operating expenditures.
ReferencesFinkler S, Baker J and Ward D 2007 essentials of cost accounting for health care organizations Burlington: Jones & Bartlett Learning