Question

There are many people who think that in the current environment of rapid change budgeting is not helpful because an operating budget is basically out of date when it is finished. Some of these folks suggest other processes instead of budgeting. Write a 1 page paper giving your reasoned opinion as to whether budgeting is still useful.

Answer 1

Budgeting has been present in one form or other since the time of organised accounting. It states how company shall ration its resources in the future period based upon the past results and future needs along with the consideration of present situation. In earlier times, variables were less and the budgeting was based upon limited study and judgements. However, with the change in time, the purpose and methodology of budgeting has undergone many changes. However it would be wrong to say that these changes have lead to diminishing the value of budgeting in forecasting the business. Budgeting is still the important tool to forecast the activities of the busienss to be undertaken.