Answer to Question #68192 in Accounting for lisa

Question

Identify and describe four types and sources of data and information required for budgeting and forecasting. Explain how data is applied to budgeting and forecasting processes.\

Answer 1

There are four types of budgets:
1. Standard Budgets (Budgeted hours and value broken down by Position and by Activity);
2. Position-Only Budgets (Budgeted hours and value broken down by Position only);
3. Activities /Expenses-Only Budget (Budgeted hours and value broken down by Activity only);
4. Totals Budget (Budgeted hours and value – Totals only.).
Three main sources of information are needed for budgeting
Business plan
Historical information from the accounting system of the organization
Knowledge of key personnel in the organization
The business plan takes information about the strategy, expected changes in the business level, changes in the state level, special events, planned services and other factors that may affect the budget.
Historical information for budgeting is taken from financial accounting: Typical sources of income for the organization; Gross profit margins; Overheads such; Loan repayments; Other costs that can be easily overlooked.
Knowledge of key personnel in the organization - This is a wish list of direct participants, which will significantly improve the budget. This is a wish list of direct participants, which will significantly improve the budget. That is, it will give it a more realistic character.