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How I learned MS Excel 2007 is the best tool to prepare budgets? January 24th, 2014 Posted in MS Excel The importance of a budget in a business can never be overstated. Be it any size of a business, a budget is always a must-have. A well-structured budget assists the management in planning and controlling business activities and evaluates the efficiency of operations. Budgets can be tabulated on a monthly, quarterly, half-yearly or on an annual basis. It is desirable that these estimates are prepared on a spreadsheet because of its flexibility in nature, so that the data can be customized based on the situation. Today | thought of showing you the process of creating a simple budget summary for an organization. To create a Corporate Budget for Jan 2014 a [Actual [Variance _[Variance(%)| Revenues Other incomes [Total income | Expenses: | ‘Advertising Bank Fees Insurance Interest Lease Office Supplies Repairs Subscriptions Sundries Taxes ‘Telephone Utilities Payroll ‘Total After opening a blank worksheet in Excel application, I have set the categories first. The two main categories needed for the purpose were Incomes and Expenses. Adjacent to the categories, I have set two columns. The first column depicts the budgeted figures, while the second one shows the actual values. One should feed in the names of all the items of income such as Revenues, sundries, income from other sources etc. under “Income” category. Similarly, all the expense items like Rent, Taxes, Repairs etc. are inserted under “Expenses”. It is preferable to leave a few rows at the top and some columns at the left empty while setting up the spreadsheet. This will enable you to insert data in the table on a later date or to reorganize the budget template as a whole. Next, I have inserted all the forecasted values of income from revenue sources or any other earnings under the “Budget” column next to “Income”. In the same manner, | have put all the budgeted figures of expenses adjacent to the “Expenses” category. Expenses can be “Fixed” or “Variable” in nature. Fixed expenses do not vary periodically, while Variable expenses change from time to time. At the end of the period, | inserted all the actual income and ‘expense figures in the “Actual” column. Finally, I calculated the difference between the budgeted and the actual numbers. I placed the figures under the “Variance” column and computed the % of variance right next to it. Calculation of variance in percent (%) is considered to be usefulas it helps a user to get the relative size of the variance. The budget so designed actually enables one to determine if the estimation was in line with the actuals. If not, it is essential to make out why the actual figures varied from the budgeted ones. By understanding the reason for the difference, a user can easily identify a potential problem and remedial actions can be taken. Points to remember while preparing a budget: 1, It is absolutely important to remember that a budget should be of dynamic in character, so that it can be modified as and when needed. 2. A budget is prepared to restrain from unneeded spending, but it should not be a rigid one. Give a second thought to incur any expense which is not in your budget but appears to be valuable for your business. Hope this article would make things easier for those who earlier had missed out this simple-yet-prominent feature that Excel offers us. Therefore, analyze your company budget in the right way and prepare well enough for the futu