Financial Accounting Concepts Essay Example | Topics and Well Written Essays - 500 words - 6

Financial Accounting Concepts - Essay ExampleThe advantages is that the more concerned managers are involved, the remedy the chances are of the budget being very much realistic in approach. These budgets are generally made at all levels but psychely, rather than collectively. For instance, a salesman keeps a self imposed budget of, e.g. 5 units to be sold in a day.Base Year Budget It is the type of budgeting in which the preceding(prenominal) year or any year for that matter is considered a standard, against which the pass judgment (/wanted) performance is added to have a forecasted budget for the coming term. For example, considering 2006 as a lowly year, with all revenues and expenses expected to rise by 10% the said percentage is multiplied across the board to attain the coming year budget or forecast.Zero Based Budget It is a derived form of the base year budget in which no base year is considered and the concerned manager is expected to justify each and every expense that h e/she has stated in the forecast/budget. These are difficult to make, require extensive efforts and data gathering, since there is no base, the budget has to be prepared fro scratch.The users of budgets use these for different purposes e.g. accountants use the information to check with variance for future better forecast, the heads check the contribution and performance of individual employees, the management checks the department working and profitability, while the owners view the over all big picture to visualize individual contributions and achievements.