Budgeting

Question 1

What are the 5 steps in the strategic planning process ?

Answer 1

1. Specification of objectives and strategies
2. Creation of long term plan to implement strategy’s
3. Preparation of the annual budget within the context of the long term plan
4. Monitor actual results
5. Respond to deviations from plan

Question 2

What is the definition of budget ?

Answer 2

A financial plan for the short term and is designed to convert the long term plan into an actionable blueprint for the future

Question 3

Limiting factors

Answer 3

The limiting factor must be identified before preparing budgets as most budgets will be effected by the limiting factor

Question 4

What is the 8 step budgeting process ?

Answer 4

1 budget committee set budget policy and key guidelines

2 determine limiting factors

3 prepare budget for the limiting factor

4 prepare draft budget for all other areas

5 negotiate budgets between budget holders and senior management

6 review and coordinate budgets

7 acceptance and implementation

8 monitoring performance relative to the budget