Budgeting is an “integral part of management control systems” (Datar,
S., & Rajan, M., 2018). Some of the advantages of budgeting are:
• Promote coordination and communication among subunits
within the company
• Provide a framework for judging performance and facilitating
learning
• Motivate managers and other employees.
Budgeting is time-consuming, and “for most organizations, the annual
budget process is a month-long exercise that consumes a tremendous
number of resources” (Datar, S., & Rajan, M., 2018). As many companies
are expanding their business and as technology is enlarging daily, a
traditional approach to budgeting may not always be the best solution
for accuracy. Companies are spending too much time on budgeting
annually. "It’s much more accurate to make predictions two months
out. Base those forecasts on items similar to an annual budget, such as
contractual obligations, projected expenses, and sales estimates, but
move them closer to the activity." (Rygelski, 2018) This statement
makes a valid assessment. Better forecasts could be made if budgets
were completed; changing the budget more frequently would also help
with overages and shortages and make fewer mistakes, especially
when you think about how many companies hold digital assets like
Ethereum and Bitcoin on their balance sheets. Because cryptocurrency
is so volatile, it's better to report the value while the purchase is being
held than just writing a loss or the sale price annually.
Datar, S. M., & Rajan, M. V. (2018). Chapter 6: Master Budget and
Responsibility Accounting. In Horngren’s Cost Accounting: A Managerial
Emphasis (pp. 197–249). essay, Pearson Learning Solutions.
Rygelski, M. (2018). Budgets Don't Work: Here's How Businesses Can
Do It Differently—retrieved 2022, from https://www.forbes.com.
Budgeting is an “integral part of management control systems” (Datar,
S., & Rajan, M., 2018). Some of the advantages of budgeting are:
• Promote coordination and communication among subunits
within the company
• Provide a framework for judging performance and facilitating
learning
• Motivate managers and other employees.
Budgeting is time-consuming, and “for most organizations, the annual
budget process is a month-long exercise that consumes a tremendous
number of resources” (Datar, S., & Rajan, M., 2018). As many companies
are expanding their business and as technology is enlarging daily, a
traditional approach to budgeting may not always be the best solution
for accuracy. Companies are spending too much time on budgeting
annually. "It’s much more accurate to make predictions two months
out. Base those forecasts on items similar to an annual budget, such as
contractual obligations, projected expenses, and sales estimates, but
move them closer to the activity." (Rygelski, 2018) This statement
makes a valid assessment. Better forecasts could be made if budgets
were completed; changing the budget more frequently would also help
with overages and shortages and make fewer mistakes, especially
when you think about how many companies hold digital assets like
Ethereum and Bitcoin on their balance sheets. Because cryptocurrency
is so volatile, it's better to report the value while the purchase is being
held than just writing a loss or the sale price annually.
Datar, S. M., & Rajan, M. V. (2018). Chapter 6: Master Budget and
Responsibility Accounting. In Horngren’s Cost Accounting: A Managerial
Emphasis (pp. 197–249). essay, Pearson Learning Solutions.
Rygelski, M. (2018). Budgets Don't Work: Here's How Businesses Can
Do It Differently—retrieved 2022, from https://www.forbes.com.
