Budget Manual

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DEFINITION of 'Budget Manual'

A set of instructions used within large organizations to prepare budgets. As organizations become larger and more complex, it is no longer possible for one person to prepare a budget. Instead, budgeting across the enterprise must be carefully coordinated. Financial analysts work closely with each group to collect budget information on a pre-set schedule and then send data up through higher rungs of financial controllers until it can be aggregated by the CFO's office.

BREAKING DOWN 'Budget Manual'

Budgeting within large organizations is an extremely complex task. Financial analysts must make assumptions about what the future will look like based on past data. This means that even the best budgeting process is subject to considerable inaccuracies. Then, as the year progresses, each group is held to a predefined budget, which may become inadequate due to changing conditions. On the other hand, some groups will find that they have more money than they require, and may choose to surreptitiously use up the "extra" budget with unnecessary expenditures in order to avoid budget cuts.

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RELATED FAQS
  1. What are some examples of general and administrative expenses?

    In accounting, general and administrative expenses represent the necessary costs to maintain a company's daily operations ... Read Full Answer >>
  2. How do dividend distributions affect additional paid in capital?

    Whether a dividend distribution has any effect on additional paid-in capital depends solely on what type of dividend is issued: ... Read Full Answer >>
  3. Why can additional paid in capital never have a negative balance?

    The additional paid-in capital figure on a company's balance sheet can never be negative because companies do not pay investors ... Read Full Answer >>
  4. When does the fixed charge coverage ratio suggest that a company should stop borrowing ...

    Since the fixed charge coverage ratio indicates the number of times a company is capable of making its fixed charge payments ... Read Full Answer >>
  5. How does additional paid in capital affect retained earnings?

    Both additional paid-in capital and retained earnings are entries under the shareholders' equity section of a company's balance ... Read Full Answer >>
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