Unit six: Principles of budgets in a business environment

Assessment

You should use this file to complete your Assessment.
• The first thing you need to do is save a copy of this document, either onto your computer or a USB drive
• Then work through your Assessment, remembering to save your work regularly
• When you’ve finished, print out a copy to keep for reference
• Then, go to www.vision2learn.com and send your completed Assessment to your tutor via your My Study area – make sure it is clearly marked with your name, the course title and the Unit and Assessment number.

Please note that this Assessment document has 7 pages and is made up of 3 Sections.

Name:

Section 1: The purpose of budgets

This section will
[2.1]

A standardised budget is vital as it: Ensures that is specific time period for budget. Guarantee that budgets are worked out in same way all the time. Under or overspends could be identified and dealt with this.

Therefore is very important to agree the format, because you can easy understood a budgets and is easier manage real financial performance and planning income and expenditure.

2. Why do you use estimations when developing a budget? [2.2]

Is very important to using estimations, because you can planning your budgets with some unexpected terms or expenses in the future. Estimation need to made for specific and correct as possible. The previous year budget could help to make it. Estimation is very important for new business. You can planing what budget you need to start the business how much cost all things to do it.

3. Explain two methods that can be used in order to identify realistic estimations when developing a budget. [2.2]

Method 1:

Every year your’s company increase wage by 2.8 % . So you can plan your budget for next year as 2.8% wage pay rise.

Method 2:

Company paying loan for company car with 15% loan interest . So estimation budget will be clear and correct with car loan. Every month need pay certain amount of account which will not change.

4. Explain why it is important to identify the following when preparing a