THE SYSTEM OF ACCOUNTING
ACCONTING FOR BUDGETING
BUDGET:
The planning of spending and saving money from the income about
to earn in near future and/or the planning of expenditures for
keeping them under the shade of revenues comes under budgeting
based on defined period which describes if the spending in budget
is less than income, it means the estimation is under budget and if
the total income is below than expenditure, it indicates the need
of reduction in expenditures immediately otherwise debt will
increase to fill the gap or will have to increase the source of
income.A good monthly budget ensures helps in overcoming unexpected
emergencies and in reaching financial goals in comparison to
revenues and expenses or may include assets and liabilities.We may
say that budget is the name of cash inflow and cash outflow
rounding in assets, liabilities, proprietorship, revenue and
expenses.In order to create your monthly budget, you may follow the
simple stapes as in picture I;Your monthly income includes salary,
investment, interest and other sources The budget includes total
income which may be from salary, investment, interest and other
sources provide finances to expenditures and to debt payment. The
expenditure will have two segments as flexible expenses and fixed
expenses. The flexible expenses are not of permanent nature like
hospitality, entertainment, repairs, clothing, incidentals etc. and
fixed assets are the expenses which are necessary to pay for
housing, grocery, utilities, transportation, health and others. The
total expenditures flexible, non flexible and debt are paid by
monthly income and the balance remain unpaid may be saved or
invest.
The picture 2 is showing budget of a business doing trading;
Besides whole budget of individual or company, we can make
budget partially; sales budget in value and in unit, expenses
budget wholly or departmentally as in picture 3
Picture 4
Actually, the plan of spending from the sources of income and
saving something from income and spending may call budget either
written or kept in mind because nobody wants to go in debt because
of this it is said that cut your coat according to your cloth. In
these busiest days, the most of individuals and business men think
the budget is useless, waste of time, waste of paper and waste of
labour and do work according to cash flow but the concept of
budget; spending against revenues is in its place.The estimation
values shown in budget may be journalized to keep in control the
budget under accrual system and/or on meeting the purpose, the
estimation values can be reversed to keep them in actual
position.The budget is based on estimation values based on spending
against sources of income.
WRITERS VIEW
