Accounting to budget, Financial Management

Assignment Help:

Accounting to Budget:

Accounting to budget is a commonly used term to describe how an organisation controls its accounting process.

Typically, an organisation divides its revenue and expenditure into various groups. Such groupings are called the chart of accounts. The chart of accounts are broadly divided into areas of assets, liabilities, equity, revenue (or income), expense and cost of sales.  These broad areas will then be divided further into sub-groupings depending on the type of asset, income, expense etc.

When a particular sale is made, or expense incurred, the transaction will be recorded within one of these accounts.

For example:

The payment of a telephone bill will be recorded within an expense account, most likely divided into an individual account entitled telephone expenses. Professional fees / commission on a sale would be recorded within an income account, most likely divided into in an individual account entitled revenue from sales. When financial reports are prepared, in particular the Profit and Loss statement, the chart of accounts becomes the items within the statement. By establishing a chart of accounts, and recording transactions within those account, an organisation can more accurately track their revenue and expenses.

It is important that when preparing a budget, the budget items reflect the chart of accounts.  In doing so, it is a simple matter of comparing the totals of those accounts with the budget amounts for easy comparison.


Related Discussions:- Accounting to budget

What is redeemable debt, What is Redeemable debt Company will have to...

What is Redeemable debt Company will have to re-pay the debt at redemption date or between the two redemption dates (i.e. 20X5/20X9, means debt can be redeemed any time betwe

Define minimum price make producers as a whole worse off, Suppose the gover...

Suppose the government regulates the price of a good to be no lower than some minimum level. Can such a minimum price make producers as a whole worse off?  Explain. As a higher

Types of t-bills, Types of T-Bills In the US markets, though there ar...

Types of T-Bills In the US markets, though there are many types of T-bills, they can be broadly classified into two types - regular-series bills and irregular-series bills.

Long-term solvency ratios (financial leverage ratios), Long-Term Solvency R...

Long-Term Solvency Ratios (Financial Leverage Ratios)   Debt-Equity Ratio = Total Debt / Total Equity à It is a measure of a company's debt utilization. It gives the ex

Working capital, W orking Capital Working capital is measured as th...

W orking Capital Working capital is measured as the difference among organization present assets and its current liabilities. Therefore, it is interpreted by some as a meas

Call schedule, It shows the date and corresponding prices at which th...

It shows the date and corresponding prices at which the issuer can call back bonds. The issuer pays higher premium over the par value of the bond if the bond is c

Regulation of mergers and acquisitions, Regulation of Mergers and acquisiti...

Regulation of Mergers and acquisitions Mergers and acquisitions are regulated by: Competition commission If office of fair trading thinks that merg

Explain the structure of main financial statement, Citilink has just comple...

Citilink has just completed its 2010/11 management accounts. The directors are going to review the financial statements in the next board meeting. You have to prepare a FINANCIAL

What is suspension of payments, Is it possible for a company with a positiv...

Is it possible for a company with a positive net income and which does not distribute dividends to find itself in suspension of payments?  Yes. A lot of companies which entered

Analysis of cash and liquidity, • Graph the Current and Quick Ratios for th...

• Graph the Current and Quick Ratios for the five years. • Analyze observations of the trends you observed. • Support you analysis with information you observe from the Trend and

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd