We think you have liked this presentation. If you wish to download it, please recommend it to your friends in any social system. Share buttons are a little bit lower. Thank you!
Presentation is loading. Please wait.
Published byMaverick Towler
Modified over 2 years ago
Budgets Teacher’s notes included in the Notes PageFlash activity. These activities are not editable. Icons key: For more detailed instructions, see the Getting Started presentation Budgets Web addressesExtension activities Sound © Boardworks Ltd 2007 1 of 23
© Boardworks Ltd 2007 2 of 23 Learning objectives © Boardworks Ltd 20072 of 42 © Boardworks Ltd 20072 of 23 What is a budget? What are the main purposes of a budget? How do businesses prepare and use budgets? What are variances, and why are they investigated by businesses? What are the similarities and differences between budgets and cash flow forecasts?
© Boardworks Ltd 2007 3 of 23 Budgets Businesses use financial information taken from throughout the year to work out how much is being spent each week or month. The actual expenditure is then compared against the amount budgeted for. Any differences from the planned budget are referred to as variances. A budget is a type of plan for a future period, covering relevant costs and revenues that a business will encounter over the coming financial year. If you’ve budgeted before, you’ll know that planning a budget is relatively straightforward, but keeping to it is the harder part.
© Boardworks Ltd 2007 4 of 23 Budgeting The main aim is to make sure that the different sections of the business are working together effectively in achieving the overall goals of the business. What do you think would happen if budget reports were only given at the end of the year instead of at the end of each month? The budgeting process involves managers responsible for the budget (called budget holders) drawing up detailed estimates of costs for each department or cost centre of the business, and turning these into spending limits for the coming months.
© Boardworks Ltd 2007 5 of 23 The purposes of budgets
© Boardworks Ltd 2007 6 of 23 Benefits of budgeting
© Boardworks Ltd 2007 7 of 23 Budgets and cash flow forecasts A cash flow forecast is a prediction of the future flows of money in and out of the business for a specified period of time. Can you summarize what a cash flow forecast is? It shows, month by month, the money that is anticipated to be coming into the business and the money that the business will be paying out.
© Boardworks Ltd 2007 8 of 23 Budgets and cash flow forecasts
© Boardworks Ltd 2007 9 of 23 Creating a budget
© Boardworks Ltd 2007 10 of 23 Why do variances occur? Internal matters: performance of individuals (ordering) wastage of materials slow working equipment faults. External issues: change in supply and demand shortage of materials and labour change in economic conditions. Incorrect budgets: budgets are based on incorrect information. Variances are differences from the planned budget which occur in the actual expenditure. There are numerous reasons for the occurrence of variances in a budget, which include:
© Boardworks Ltd 2007 11 of 23 Variance analysis Variances take the form of either favourable (+) or adverse (-). They are worked out using the following formula: If the department has spent more than the budgeted amount, it is called an adverse (or negative) variance. If the department has spent less than the budgeted amount, it is called a favourable (or positive) variance. Variance = budgeted amount - actual amount
© Boardworks Ltd 2007 12 of 23 Example of variance analysis Examine and comment on this budget report:
© Boardworks Ltd 2007 13 of 23 Activity – Hunter’s Gardens Jeff Hunter runs a garden centre, Hunter’s Gardens. He needs your help to create his budget for the coming month. Put the following information into the budget on the next slide: Stock (plants etc): £1,000 Staff: £750 Utility bills: £80 Telephone and Internet: £50 Insurance: £28 Maintenance: £50 Vehicle costs: £75
© Boardworks Ltd 2007 14 of 23 Activity – Hunter’s Gardens Can you correctly fill in the budget using the information on slides 13 and 15?
© Boardworks Ltd 2007 15 of 23 Activity – Hunter’s Gardens At the end of the month, Jeff discovers the following spending: Stock: £900 Staff: £780 Utility bills: £80 Telephone and Internet: £65 Insurance: £38 Maintenance: £37 Vehicle costs: £98 Put this information into the budget on the previous slide and work out the variances for each cost. What are your observations about the variances in the Hunter’s Gardens budget?
© Boardworks Ltd 2007 16 of 23 Activity – tracking your weekly spending Remember to write down everything you spend and earn over the week! Make a record of your own daily income and expenses for a week. You need to include all relevant income you receive – from parents, working, etc. You also need to include all relevant expenditure you have – entertainment, clothes, shopping, food, transport etc. Use the table on the next slide as a template. An important first step in preparing a budget is to track your income and expenses.
© Boardworks Ltd 2007 17 of 23 Activity – tracking your weekly spending
© Boardworks Ltd 2007 18 of 23 Activity – self budgeting Now have a go at preparing a budget for yourself… The table on the next slide shows two sections: one for income and one for expenses. Income includes any wages and other sources of money, e.g. from parents. Expenses include food, clothing, entertainment, transportation, savings, and other miscellaneous costs. Can you categorize each source of income and expense that you listed last week? Either copy the table with categories listed, or create a table filled in with your own categories. Then you can estimate projected expenses for the coming month, using your actual expenses you listed over a week as a guide. Over the next month, track the items and see where you come in over or under budget.
© Boardworks Ltd 2007 19 of 23 Activity – self budgeting
© Boardworks Ltd 2007 20 of 23 Activity – self budgeting Is your total variance favourable (+) or adverse (-)? If your spending doesn’t balance with your income, where will you get the extra money from? If you have any money left over, what will you do with it? Are there ways for you to increase your income? If so, how could you use this money to balance your budget? Now see how well you have done! Look at the variances (differences) for each item:
© Boardworks Ltd 2007 21 of 23 Question time! What does a favourable variance tell the manager of that department? What lessons can be learned from budgeting? Why would they be unhappy if there was a favourable variance that was large? 1. 2. 3. 4. How might businesses accommodate an unavoidable overspend?
© Boardworks Ltd 2007 22 of 23 Who wants to be an A* student?
© Boardworks Ltd 2007 23 of 23 Glossary
© Boardworks Ltd of 24 Profit and Loss Teacher’s notes included in the Notes PageFlash activity. These activities are not editable. Icons key: For.
© Boardworks Ltd of 8 Personal Finance: Unit 1 Teacher’s notes included in the Notes PageFlash activity. These activities are not editable. Icons.
Building: Knowledge, Security, Confidence Setting Financial Goals FDIC Money Smart for Young Adults.
Accounting and Financial Reporting Back to Table of Contents.
Make Your Money Matter: Use a Budget (JAN 2013) Make Your Money Matter: Use a Budget Facilitators Name Date.
© Boardworks Ltd of 22 Cash Flow Forecasts Teacher’s notes included in the Notes PageFlash activity. These activities are not editable. Icons key:
25 seconds left….. 24 seconds left….. 23 seconds left…..
2-1. McGraw-Hill/Irwin Copyright © 2006 The McGraw-Hill Companies, Inc. All rights reserved. 2 Money Management Skills.
© 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 12 SLIDE Financial Planning Financial Records.
WEEK 1 You have 10 seconds to name…
© 2010 The McGraw-Hill Companies, Inc. Flexible Budgets and Performance Analysis Chapter 10.
Do Now 1)What is a budget? 2) What is the purpose of a budget?
Topic:Costs and Budgets (2) Learning Outcomes: By the end of the session, all students should be able to: Identify business costs items associated with.
Chapter 3 Money Management Strategy: Financial Statements and Budgeting McGraw-Hill/Irwin Copyright © 2007 by The McGraw-Hill Companies, Inc. All rights.
© Boardworks Ltd of 22 Teacher’s notes included in the Notes PageFlash activity Icons key: For more detailed instructions, see the Getting Started.
BUDGETS Question 1 What is the purpose of a budget? An objectiveCheap commodity Excess money Plan that outlines costs and revenue.
Copyright 2007 Thomson South-Western Chapter 4 Financial Decisions and Planning.
IB Business and Management 3.4 Budgeting (HL). Learning Outcomes the importance of budgeting for organisations (AO2) The difference between cost and profit.
Chapter 03 Money Management Strategy: Financial Statements and Budgeting McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights.
© Boardworks Ltd of 12 Cash Flow Forecasts – Unit 3: Investigating Financial Control 3.3 Cash Flow Forecasts Unit 3: Investigating Financial Control.
© Boardworks Ltd of Cash Flow Forecasts – Unit 3: Investigating Financial Control 3.3 Cash Flow Forecasts Unit 3: Investigating Financial.
ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 6 WHAT’S AHEAD 6.1Choose Financial Goals 6.2Track Income and Expenses 6.3Your Budget Worksheet 6.4Create Your.
© Boardworks Ltd of 28 Balance Sheets Teacher’s notes included in the Notes PageFlash activity. These activities are not editable. Icons key: For.
© 2011 South-Western | Cengage Learning Global Entrepreneurship and Small Business Management Entrepreneurial Enterprises The Business Plan.
DIVIDING INTEGERS 1. IF THE SIGNS ARE THE SAME THE ANSWER IS POSITIVE 2. IF THE SIGNS ARE DIFFERENT THE ANSWER IS NEGATIVE.
Addition 1’s to
CHAPTER 11 RECORD KEEPING AND ACCOUNTING February 12, 2014ENTREPRENEURSHIP (Ms. Hawkins)1 This chapter describes the importance of keeping business records.
CHAPTER 14 Statement of Cash Flows. The McGraw-Hill Companies, Inc. 2008McGraw-Hill/Irwin 14-2 Chapter Opening To make informed investment and credit.
G1 Setting Financial Goals “Take Charge of Your Finances” Advanced Level.
Completing the Accounting Cycle Accounting Principles, Ninth Edition
Title Subtitle 1. A. B. C. C. * D. Click to try again! INCORRECT.
Financial Management and Budgeting The Details. What Is a Budget? A useful tool for keeping track of funds. A useful tool for keeping track of funds.
1 Budgeting Learning Objective: Understand the function of financial budgets. Awareness of the concept of a financial budget Pg
Jeopardy Topic 1Topic Q 1Q 6Q 11Q 16Q 21 Q 2Q 7Q 12Q 17Q 22 Q 3Q 8Q 13Q 18Q 23 Q 4Q 9Q 14Q 19Q 24 Q 5Q 10Q 15Q 20Q 25 Final Jeopardy.
Unit 3 Accounts & Finance Budgeting. Learning Objectives Understand the importance of budgeting for organisations Calculate and interpret variances Analyse.
16-1. Money Management Basics $100 probably seems like a lot of money to you now. In the future you will have more expenses Food, housing, insurance,
W HY B UDGET ? Money In & Money out. Objectives Students will be able to estimate monthly income and expenses Students will be able to determine whether.
© Boardworks Ltd of 6 Teacher’s notes included in the Notes PageFlash activity Icons key: For more detailed instructions, see the Getting Started.
Addition Facts = = =
Chapter A plan for saving and spending. Allows you to meet your personal goals with a system of wise spending.
© Boardworks Ltd of 17 Teacher’s notes included in the Notes PageFlash activity Icons key: For more detailed instructions, see the Getting Started.
FINANCIAL PLANNING Notes. Financial Planning in Business Financial questions never go away… Beginning a Business Where will you get the money? How much.
Time Management F OR A S MALL B USINESS. TIMEMANAGEMENT 2 Welcome 1. Agenda 2. Ground Rules 3. Introductions.
© Boardworks Ltd of Cash Flow Forecasts – Unit 3: Investigating Financial Control 3.1 Cash Flow Forecasts Unit 3: Investigating Financial.
Teacher’s notes included in the Notes PageFlash activity. These activities are not editable. Web addresses Icons key: For more detailed instructions, see.
Cash Flow Forecasting. Lesson objectives Understand what cash flow is and be able to produce a cash flow forecast Learning outcomes To be able to describe.
1 2 Analyzing Transactions The T account has a title. The T Account Title 1.
Building: Knowledge, Security, Confidence Pay Yourself First FDIC Money Smart for Young Adults.
© 2017 SlidePlayer.com Inc. All rights reserved.