Budgeting Operational Plans ( Individual Project ) Research Paper

Budgeting Operational Plans ( Individual Project ) - Research Paper Example This enables the managers of a company to report to the shareholders how their investments have been maximized over a period of some time. Different companies use different approaches to recording and reporting their financial details (McConnell, 2001). Both manual methods and computer assisted technologies are being used to facilitate proper recording of financial details of companies. With the rapid developments in technology, software applications have been developed to assist companies manage their financial record effectively. As a result, more companies are using computer aided financial reporting so as to give more authentic and reliable financial reports. Financial statements have to be prepared in accordance with set standards and reported timely to users. Financial reporting systems help companies achieve their financial objectives through accurate recording and timely reporting of financial reports (Siegel & Shim, 2006). A financial reporting system refers to all the proce dures and processes that a company employs in order to ensure financial accountability. These include the polices and measures put in place to ensure proper recording, verification of financial transactions as well as timely reporting. ... The financial reporting database helps the company prepare its financial statements such as the balance sheet, income statements, and cash flow statements periodically. This can be done either on a monthly basis, quarterly or annually. The budgeting database enables a company to access past financial information and helps the managers calculate financial estimates for the next accounting period. The budgeting database is well structured with expense thresh holds and cost limits that managers wish to set for the company (McConnell, 2001). A general ledger contains different accounts where information relating to financial transactions is recorded by the accountants or bookkeepers. Activity Based Budget The activity-based budgeting is a new and emerging trend in budgeting that seeks to give companies a new approach to manage their budgets. Activity-based budgeting allows company executives to present their budget based on the actual costs of the company’s products as opposed to the traditional budgeting methods, which require the budget to include various factors, which affect costs such as training and compensation (Mancino, 2007). In Activity Based Budgeting (ABB), only those business activities that incur costs are taken into consideration when preparing budgets. These activities are then aligned to specific objectives and goals, and thereafter, the costs that will be required to meet these business activities are used to draft the budget. The traditional method of budgeting only allowed company executives to adjust the budgets for previous financial periods so that they meet the new objectives for the next financial