Financial Decision Making: Anticipated Incomes Essay

Question:

Describe about the Financial Decision Making for Anticipated Incomes.

Answer:

1. Budget refers to the process of estimating the future potential expenses and incomes of a company. A budget is over plan when the anticipated incomes and expense are proved a lot more than the actual income and expenses. Thus, to avoid the over plan of a budget, the accountants need to follow some steps. The first step is to know where the money of the business is going. In this step, all the expenses need to be considered irrespective of the size of the expenses and incomes. The second step is to dset a budgeting goal that needs to be achieved. The third step is to recognize the sources of the incomes of the business. The last and the most important step is to compare all the expenses with the incomes. It is good if there is surplus. In case there is deficit, corrective measures need to be taken (Libby and Lindsay 2010).

2. It can be said that the ethical behavior of the accountants play a big part in the over plan of the budgets. There are instances that the accountants of some companies increased the expenses or the incomes in the budgets for specific reason. It is done in order to manipulate the financial position of the company as this act impacts the financial reports of any organization. On the other hand, there can be some hidden unethical benefits for the higher management of any organization by doing so; and this is the reason for which over plan of budgets is done as a result of an unethical agreement between the higher management and the accountants of the companies (Zatta 2016).

References

Libby, T. and Lindsay, R.M., 2010. Beyond budgeting or budgeting reconsidered? A survey of North-American budgeting practice. Management Accounting Research, 21(1), pp.56-75.

Zatta, D., 2016. Implementation of Revenue Management in the Process Industry in North America and Europe. In Revenue Management in Manufacturing (pp. 43-57). Springer International Publishing.

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