Accounting All-in-One For Dummies (+ Videos and Quizzes Online), 3rd Edition

Chapter 4

Budgeting for a Better Bottom Line

IN THIS CHAPTER

Getting up to speed on budgeting fundamentals

Gathering accurate information and projections

Drawing up a budget — the essential budget documents

You need accurate information to make smart decisions about your business. A well-planned budget may be the most important piece of information you use. Budgeting is a proactive process, the thinking person’s accounting. You anticipate future outcomes and can maximize them. You anticipate problems and may be able to minimize or eliminate them. Taking that approach is a lot better than operating in ignorance and reacting to events as they arise.

In this chapter, you look at budgets, consider how to anticipate costs, and work through some essential budget documents.

Brushing Up on Budgeting

A budget is a financial plan that includes both financial and nonfinancial information. Its most obvious features are revenue and expense projections — how much you anticipate earning and spending. The budget can also contain nonfinancial information, such as how many employees you think you need.

A budget is a forecasting document, but businesses also use it as a financial-control tool to ...