BIOL 2P98 Lecture Notes - Pro Forma, Budget, Income Statement
22 Jun 2014
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Document Summary
Budgets are financial plans for the future and are a key component of planning. They identify objective and the actions needed to achieve them. Before a budget is prepared an organization should prepare a strategic plan. Strategic plan identifies strategies for future activities and operations, generally covering at least five years. The organization can translate the overall strategy into long and short term objectives. These objectives form the basis of the budget. The budget and strategic plan should be tightly linked. Control is achieved by comparing actual results with budgeted results on a periodic basis (e. g. monthly). A large difference between actual and planned results is feedback revealing that the system is out of control. Master budget is the comprehensive financial plan for the organization as a whole. Typically the master budget is for a one-year period, corresponding to the fiscal year of the company. Continuous budget is a moving 12-month budget.
