BUDGET

Over the decades, budget has been the most important thing, especially in accounting. Budget is
a summary income and expenses of a given period. The important role of the budget is to keep track of
the money coming in and the money going out. It provides you a comprehensive financial and
operational activities. It can help to avoid the company to avert a financial crisis and plan for major
financial changes in the future. In this case, budget can provide us many advantages and disadvantages.

One of the advantage of budget is control the evaluation. If the company have a budget, it will
help to think about how to correct company’s problem. Motivation is another important advantage. It
can motivate the company to reach the goals. With budget, managers in the company can evaluate the
activities and force to think and formalizing their responsibilities of planning.

A budget also can be disadvantage. Budget can be seen as pressure by management. Beside of
that, budget can make a conflict arises. Budget also can make departments blaming each other if targets
are not attained. Staff may be demotivated if the targets set are too difficult or too easy to achieve.
Budget also takes away management flexibility. This creates unnecessary tension and the company may
not be able to run efficiently.

Traditionally, budget were seen as the way to forecast the business activity in the future.
Prepared by a business owner or a senior manager who has knowledge. This means that the budget is
very accurate when compared to the actual results. Many managers have problems using this budget for
future planning. Because of this problem, resulting in budget changes and making managers use
accounting professionals in preparing budgets.

In conclusion, there are so many advantages and disadvantages we can receive from budget.
But I think that budget can help us to avoid financial problem and provide more benefits for us.