It also used to be called financial management 2B
It has a lot of explanation and summaries of the content with exercises that have solutions for you to revise and practice on
,SECTI
TITLE PAGE
ON
UNIT 1 Budgets
Capital budgeting and Cash Flow
UNIT 2
Principles
UNIT 3 Capital Budgeting Techniques
UNIT 4 Leasing
UNIT 5 Corporate Governance
The final mark will be based on:
The assignment------------------------ 50% (DUE: 28 August
2018)
Final Examination ----------------------- 50% (8 November
2018 09:00 - 12:00)
Supplementary---------------------------(8 January 2019: 09:00
– 12:00)
, CHAPTER 1: BUDGETS
UNIT OUTCOMES
Distinguish between budgets and budgetary control
Explain the purpose of budgeting
Prepare a sales budget, purchases or production budget, cost of
sales budget, budgeted statement of comprehensive income,
cash budget and budgeted statement of financial position.
1.1. INTRODUCTION
The planning, monitoring and control of costs are important for
the purpose of maximizing profit. Budgets and budgetary
control are important management tools that assist
management in planning and cost control.
PLANNING is an essential of the management process,
representing the initial activity in the planning and control
cycles of the decision-making process.
It creates a path for achieving a firm’s goals and objectives.
1.2. KEY CONCEPTS
, A BUDGET is a plan expressed in monetary terms to determine
whether the financial plan will achieve the objectives of the
enterprise for a given period.
It quantifies financial plans; budgeting is the process of
financial planning using both financial and managerial
accounting concepts. The first step in the budgeting process is
to develop and communicate a set of broad assumptions about
the economy, the industry, and the organisation’s strategy for
the budget period.
The budget serves as a benchmark against which actual
results can be compared.
The budget preparation process requires communication
and coordination of activities among various functional
areas of the firm in order to align organizational goals.
According to CIMA, Budget is defined as “a financial and or
quantitative statement prepared and approved prior to a
defined period of time, of the policy to be pursued during that
period for the purpose of attaining a given objective. It may
include income, expenditure and the employment of capital.”
A budget may be defined simply as a plan expressed in
financial terms. It details the strategic plan that the
management intends to follow to achieve business goals and
objectives from the present to the future. A budget must reveal
the plans to achieve the objective of the firm for a given period.
Budget exhibits managerial plans and policies, for the
organisation as a whole, or part thereof, to achieve business
goals and objectives in quantitative terms for a definite period.
The entire process of preparing the budgets is known as
Budgeting. It is essentially managerial action of planning. A
budget must have the following features:
- It should reflect the managerial plans and policies to achieve
business goals and objectives;
- It is expressed either in monetary terms or quantitative
terms or both;
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