Financial Accounting Cost Accounting

Questions: Describe the company that you currently work for, have previously worked for, or would like to work for in the future. Determine at least two (2) compelling reasons that this company should prepare and manage a budget. Predict the two (2) most likely positive and negative financial outcomes for this company if it properly or improperly performs effective budgeting. Outline a high-level budget plan for the company. In your high-level budget plan, recommend the most appropriate budgeting phases for the company. Propose two (2) methods and techniques that the company should use to manage its budget over time in preparation for the fact that budgets are ever changing. Justify your response. Imagine that the company is facing a financial challenge that is causing the actual amounts of money that it spends to become significantly off target from its budgeted amounts. Prepare an action plan to resolve the budget misalignment. In your action plan, recommend at least one (1) budgeting technique to resolve the budget and actual discrepancies. Provide a rationale for your response. Answers: Introduction Budget can be stated as a financial plan that aids the company like an estimate and helps in evaluating the future scenario of the business. Hence, it is an estimation of future cost. In reality, budgetary control is linked to the budget. Effective budget is the need of the hour and an ongoing process. Beyond question, a wise budget is one that keeps on moving and brings positive yield to the organization. Going by my specialization, I will prefer to join Cisco. In reality, there are many deficiencies when it comes to comparison with other companies owing to the budget. The inefficiency in the system does not lead to full resource utilization. This highlights the significance of budget. I prefer Cisco owing to the wide range of products, services, and solutions delivered by it. As I am from the IT background therefore joining Cisco would be an added advantage because it is engaged in designing and manufacturing of internet protocol and various other products that are linked to information technology. The company group its products into many categories like Switching, collaboration, wireless, data center, etc. Reason for having Budget It is important for Cisco to have a budget into practice. Firstly, the performance needs to be enhanced and in order to do that it is essential to have a strong budget into practice. This will helps to keep a strong note of the income and expenses (Albrecht et. al, 2011). As Cisco is catering to wide range of products therefore, budget is important, as it will help in providing a detailed plan. Execution will becomes better and there will be a strong awareness regarding the expenses. This will lead to fulfillment of goals. Secondly, in order to grow and bring further progress it is important to have a strong budget into operation. Budget helps to track the deficiencies and steer the business in the correct direction and for healthcare, it is of utmost importance as it helps in meeting the needs. Positive and Negative Outcomes If the budget is properly implemented then it will bring positive result to the division. It will act as a mechanism for evaluation, as well as performance management. This will aid the management in taking proper and relevant steps and will act as a control for the organization. This will helps in regulating the activities of the entire organization. Secondly, if the budget is followed properly it will lead to conformity of the plans and policies thereby providing a valid direction. Planning and coordinating will be easily done with the help of budget. In short, it can be said that budget will act as a performance evaluation because the present action will be compared with the pre-determined ones (Williams, 2012). On the hand there are negative implications too if the company performs the part of the budget in an improper manner. The expenses will be left unchecked that may lead to potent issues and hence, the cash flow will be impacted. Moreover, it might lead to serious dent in the income statement (Horngren, 2011). Secondly, the desired goal of the healthcare will not be achieved, as there will be deviation from the proposed goal. High-level Budget Plan Budget Phases for Cisco A high- level budget plan can help Cisco in backing up the strategies and working. The new model or the plan can help the company in identification of new opportunities and even generating funds for the business. Managing Cash Flows Management of cash flow is one of the toughest challenges that help the business to manage the cash flow. For Cisco, cash flow statement is vital because it will enable the company to maintain the cash flow and pay the bills at the specified time. The projection, evaluation and of cash flow will help the manager in managing the business performance (Williams, 2012). Budget Deviation Analysis Budget projects the figures that are needed to be spent and earnings that will be received during a specified period. Budget deviation analysis is important in comparison of the effects and compares what is expected. This analysis will help in stating whether the plans are adhered to and what steps can be taken into consideration for adjusting the budget in future (Durry, 2011). For Cisco, it is important, as it needs to maintain a strong hold in the market. Budget Phases The four phases of budget are formulation of budget, Approval of budget, execution of budget and oversight of budget. From my point of view, the oversight of the budget and its execution are the two important phases. Oversight of the budget is vital because it is audited in this step and needs strong action by the executives to strengthen the findings of the audit. Secondly, budget execution is the most important because money allocation is done in this step (Horngren, 2011). In the light of changing circumstances the two techniques that can be used is incremental budgeting and flexed budgeting. The incremental budgeting is one that merges the cost traced from the past accounting period with certain additions (Spiceland, 2011). The additions are used to focus two main segments that are purchase costs and business volume. Secondly, the flexed budgeting is needed to flex the normal budget. It is accurate in nature and helpful for the managers (Horngren, 2011). For Cisco, this will help in great way as the budgets tend to change and this will act as cushion. Action Plan If the actual money is more than the budgeted plan, it signifies that there is non-alignment. In this scenario, corrective actions need to be taken. The payment, receivable cycle needs to be checked and set accordingly. Secondly, the weak area needs to be noted and assessed that will help in removing the deficiency. Thirdly, the problem can be removed by following an alternative plan and ensuring that the system of cash is not affected (Drury, 2011). Flexed budget is the technique that can be used in the changing scenario and when the budget mismatch. In this technique, managers can provide vital news that leads to an achievable budget and an optimistic one (Drury, 2011). The good and worst result is evaluated on a bigger perspective and better decision making arrives from here. Therefore, flexed budgeting provides the managers to control the scenario and leads to a better outcome in the light of changing situations. It is settled in the changing scenario and hence, the most important technique when it comes to changes. By considering the financing options and the availability of resources, Cisco can implement a strong budget. It needs to assess the solution that is available and can develop a strong relationship with the customers. Moreover, the management must be made aware of the plans and should be evaluated periodically that helps to drive the business. Control mechanism along with strong plan will help the company to rectify the deficiencies, if any. This will bring a positive momentum and helps the company to grow in the long run. Conclusion From the discussion, it is clear that Cisco needs to implement a strong budget so that the management is done with ease and flexibility. The budget must correspond to the current situation and leads to strong benefits. More importantly, the utilization of budgeted techniques comes to the forefront and flexed is vital in the light of changing circumstances and external situations. By considering the............ References Albrecht, W., Stice, E. and Stice, J. (2011).Financial accounting. Mason, OH: Thomson/South-Western. Brealey, R., Myers, S. and Allen, F. (2011). Principles of corporate finance. New York: McGraw-Hill/Irwin. Drury, C. (2011).Cost and management accounting. Andover, Hampshire, UK: South-Western Cengage Learning. Horngren, C. (2011).Cost accounting. Frenchs Forest, N.S.W.: Pearson Australia. Williams, J. (2012).Financial accounting. New York: McGraw-Hill/Irwin. Spiceland, J., Thomas, W. and Herrmann, D. (2011). Financial accounting. New York: McGraw-Hill/Irwin, University Press