management 6

plan for the future 

emerges from companys objectives, goals, and mission

looks forward (accounting looks back in time)

operating budget

capital budget

zero based budget

most common, made from income statement, revenues and expenses 

esimates for the next year if you have enough money to run the company 

used in planning process (goals)

includes estimated expenditures for fixed assets 

takes into consideration long term purchases

assets that would benefit the company for many years

most difficult to prepare and provides the most detail

start with all revenues and expenses at 0 and need to justify each line to be necessary and realistic

used if company is overspending 

compare one companys actual performance to other companies budget within the industry 

planning (how much money will be needed to operate)

supporting, communication and coordination (where money goes)

assigning resources

benchmarking

assessing performance (assess own performance over time)

gather every financial statement and record all income and expenses

break expenses into fixed and variable

review monthly

replicate the prior year and no changes

use last years with anticipated changes on each line

develop one using may years of info 

income- cash inflows

expenditures- outflows

use ratios and analyze your personal spending