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

Financial Accounting Concepts - Essay ExampleThe advantages is that the more come to managers are involved, the better the chances are of the figure being very much realistic in approach. These budgets are generally made at all levels but individually, rather than collectively. For instance, a salesman keeps a self compel budget of, e.g. 5 units to be sold in a day.Base Year Budget It is the typeface of budgeting in which the previous socio-economic class or any year for that matter is considered a standard, against which the expected (/wanted) carrying into action is added to have a forecasted budget for the coming term. For example, considering 2006 as a base year, with all revenues and expenses expected to mount up 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 b oth expense that he/she has stated in the forecast/budget. These are difficult to make, require extensive efforts and information 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 offend 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.