Understanding the Budget, Relationships, and Benefits of the Budget

Understanding the Budget, Relationships, and Benefits of the Budget
Understanding the budget according to some experts:
Glenn A Welsch defines the budget as follows: “Profit planning and control may be broadly as de fined as systematic and formalized approach for accomplishing the planning, coordinating and controlling responsibility of management”.
According to Gomes (1995, p.87-88), the budget is a document that seeks to reconcile program priorities with projected sources of income. The budget combines an announcement of the organization’s activities or objectives for a specified period of time with information about the funds needed for the activity or to achieve that goal.
According to Mulyadi (2001, p. 488), the budget is a quantitative stated work plan that is measured in standard monetary units and other units of measurement which cover a period of one year.
According to Supriyono (1990, p.15 on Web Education Sharing Knowledge), budgeting is a corporate financial planning that is used as a basis for controlling (controlling) corporate finance for the coming period.
According to Garrison, Norren and Brewer (2007: 4), “A budget is a detailed plan regarding the acquisition and use of financial and other resources over a certain period of time”.
According to M. Nafarin (2004: 12), Budget is a written plan regarding the activities of an organization which is stated quantitatively and generally in units of money for a certain period of time “. According to Herawati and Sunarto (2004: 2), ”
From some of the above meanings, the budget (budget) can be interpreted as a plan that is arranged systematically in the form of numbers and expressed in monetary units which include all of the company’s activities for a certain period in the future.
Definition of Budgeting
Budgeting is the creation of a plan of activities expressed in financial measures. Budgeting plays an important role in planning, controlling, and making decisions.
Factors That Influence Budgeting
1. Internal factors, namely data, information and experience contained in the company itself, which include:
a). Last year’s sales
b). Company policy
c). Production capacity
d). Workforce owned
e). Facilities
2. External factors, namely data, information and experiences that are outside the company, but are felt to have an influence on the life of the company. these factors include:
a). State of competition
b). Community growth rate
c). Level of community income
d). Community education level
e). Population distribution rate
f). Customs and community relations
g). National and international economic conditions, technological and communication advancements, etc.
Relationship between Budget and Management
Management is defined as a science and art for planning, organizing, directing and directing, coordinating and controlling people and goods, to achieve certain goals that have been set. If the budget function is compared with the management functions, it appears that the budget has a very close relationship with management. Thus, the budget is a management tool to help carry out its functions. Another relationship between the budget and management is in helping management manage the company.
Management must make decisions that benefit the company most, such as choosing goods or services to produce and sell, selecting or selecting customers, determining price levels, production methods, distribution methods, sales terms. In the relationship and the relationship between budget and management that is very close in terms of planning. In this case the budget is useful to help management research, study problems related to the activities to be carried out. At other times, before planning an activity the manager conducts research and observations first. Making a plan will benefit all activities. Especially activities related to financial needs, inventory levels, production facilities, purchasing, advertising, sales, product development and so forth.
Relationship between Budget and Accounting
Accounting is a service activity, its function is to provide quantitative data, especially those of a financial nature, from the economic business unit used in economic decision making, in this case an alternative to a situation. To provide data, each transaction needs to be classified, summarized and then presented in the form of a report. Thus if related to the budget, accounting data is one of the main sources, this is because accounting provides historical and actual financial data that meets the objectives of analysis in developing company plans. Furthermore, budget adjustments must be adjusted to the accounting system contained in the company, especially the classification of transactions in estimates.
The classification of transactions in estimates for the budget must be the same as those in the financial statements, with the intention that they can be compared so that it can be known irregularities that occur.
Relationship between Budget and Statistics and Mathematics
Statistics and mathematics are very necessary to prepare a budget. Accuracy in making estimates in addition to depending on the completeness of the availability of data, also depends on the accuracy of the use of statistical and mathematical methods used to process and analyze the data.