Management accounting Essay Example | Topics and Well Written Essays - 1500 words - 15

Management accounting - Essay Example On the basis of this,the budget allocation needs require to be constantly updated (Govindarajan& Shank, 1992). This report will discuss the descriptive and reflective requirement of the formal budgeting process. This has become a necessity of the business because of the increasing volatility. The budgets need to be allocated accordingly so that the benefits can be acquired. The businesses irrespective of their sizes require maintaining their budgets appropriately. With the budgeting processes,the businesses control and determine the tools through which the profits and the bonuses can be allocated within the business. The objective of budget allocation is that the companies can ensure that the financial stability is maintained and with this it also prevents the budgets from becoming negative. In the large businesses,the budgeting process has the highest priority. On the basis of this,the organizations manage their operations. The strategic managers set the goals and on the basis of finance available they allocate the budgets of accomplishing the required tasks. Once the budget is approved it becomes a road map and on the basis of this the future development is planned and structured. The budget development requires that the strategy which is approved by the strategic managers is delivered to the workforce and that they understand what the organization wants from them. The most essential use of the plan is allocation of resources and keeping the workforce prepared against the opportunities and barriers. The budgeting process can be divided into two subcategories. Theseare the traditional and zero based budgets. In the traditional budgets,the analysis is done on the basis of historical modifications and projections. All these are established on the basis of inflation and the growth rate. In the zero based budget a completely new budget is created, and all the capital is raised separately.