c7: budgeting

• budgeted - actual = variance
• what makes a firm financially sustainable?

  • predictable and reliable revenue
  • processes to monitor finances and plan for contingencies
  • sufficient cash on hand to cover routine and emergency needs
  • expenses that line up with expected revenue
• budegting is one of the attributes of a financially sustainable organization. it is a process to monitor finances and plan for contingencies.
• Budgeting is a critical control process for the managers of organizations to plan and monitor how to use the organization’s financial resources.  This promotes efficiency and reduces waste because it holds people accountable for working within their allocated resources.
• a budget is A plan for acquiring and using funds for a specified time period
• revenue - expenses = budget surplus/deficit
• when revenue = expenses, we have a breakeven budget
• This is why an organization’s budget must be aligned with its strategic plan and priority initiatives