OFFERS Buy 4 assignments and get 1 absolutely FREE!
Search
25% off
+
FREETurnitin
report

Prices from

£7.41

£5.56
Safe & Trusted

Critically evaluate the following statement. “Budget is different from forecast”

From assessment, it has identified that budget is highly different from forecasting. Moreover, it presents company’s expectations which it wants to achieve within a particular time period specifically in one year. Budgeting includes detailed presentation of future results, position and cash flows which it wants to achieve during the specified time frame (Franklin, 2017). On the other side, forecasting is limited to the items of major revenue and expenses. Further, forecasting is updated at regular intervals usually on monthly and quarterly basis. On the contrary to this, budgeting frameworks are usually updated once in a year. Updation of budget highly depends on the willingness of management team in relation to revising information.

In addition to this, budgets are used for doing comparison of actual results with expected figures with the motive to assess deficiencies which take place in the performance level. This in turn enables management team to take remedial measures within the suitable time frame for performance improvement. On the other hand, forecasting details are used for short-term operational considerations such as inventory level and production plan (Weigend, 2018). Under forecasting, no variance analysis is done which compares forecast with the actual results. Hence, it can be presented that significant difference takes place in budget and forecasting. Moreover, budget implies for the financial plan, presented in quantitative terms, prepared by management team in advance for the upcoming time period (Budgeting v/s forecasting, 2018). Whereas, in forecasting, future trends and outcomes are estimated on the basis of past and present data set.

REFERENCES

  • Franklin, A. L., 2017. Guess, George M. 2015. Government Budgeting: A Practical Approach. Albany, NY: SUNY Press. 211 pp. $30. ISBN‐13: 9781438456683. Public Budgeting & Finance. 37(4). pp.134-135.
  • Weigend, A. S., 2018. Time series prediction: forecasting the future and understanding the past. Routledge.