Question

1. Why do companies create budgets, what is the importance of a budget, and how do budgets help businesses?
2. What is a Master Budget? Please describe its contents and talk about the relationships between those contents.
3. Do you believe in household budgets, do you think budgets are helpful to stay on track?
4. Do you ever compare the amount of money you make versus how much money you spend?

Answer 1

Companies based budgets for setting goals and target to be achieved in a certain period.

Importance of a budget is as follows :-

1. Budget helps in forecasting the future in terms of financial matters.

2. Budget helps in setting targets for certain period of time and comparing the actuals after completion of the specified period.

3. Budget helps to management for evaluation of performance of the organisation.

4. Budgets can be drafted to control the unusual expenses of the organisation.

5. Through budgets we can know that in how many ways the organisation can get income and and how those income is expended for the running of the business.

6. if there is any deviation from the budget in the performance of the organisation then management take appropriate care 2 to avoid those the patients this helps in maintaining uniformity in the performance of the organisation.

7. through budgets organisation can get knowledge about which product line is profitable and which product line is loss making and through drafting budgets we can know which product require less financial resources and which product needs huge financial resources by this information we can regulate our product lines or divisions or subsidiaries of the company.

Master budget.

Master budget is a combination of several functional budget.

Functional budget of the budget directed by the functional manager who was the head of each functional area in a particular organisation.

Yes I believe in household budgets. Yes I think budgets are helpful to stay on of track financial resources.

I will regularly compare the amount of money that I have earned and the amount of money that I I am spending.

So budgets are useful not only for the organisations and companies but also for the household and individuals for comparing of financial resources that they earn and they are spending.

These are all the information required to solve the above given question.

I hope, all the above given information explanations are useful and helpful to you.

Thank you.