All companies should create annual budgets. Large corporations certainly do. It is often a time-cosuming process, lasting several months. The budgeting process for a large corporation with a fiscal year-end of December 31, could start as early as July in order to have a completed budget ready for the beginning of the new fiscal year.
The purpose of a budget is to provide an outline of the financial plan for the fiscal year. The plan is broken down into departmental budgets so that each area of the company has their section of the plan as their guide for the upcoming year.
The 'budget' for any company is not just a single budget, it is actually a series of several budgets that all inter-connect to create the Master budget for the coming year.
The budgeting process starts with a forecast. This forecast is created by the sales team and establishes a projection of the sales that they expect to be able to make in the coming year. Their estimate forms the basis of the budgets - the company must do what needs to be done in order to supply the product needed to meet the sales projections.
About Me
- Professor C.
- I have been a member of the faculty at Broward College for over nine years and during that time I have taught all three introductory accounting courses offered at that college. I have a Masters degree in Accounting and received my CPA license in the state of Virginia. I have also had many years experience working in corporate America, prior to becoming a member of the BC faculty.