Firstly, accounting is the measurement, statement or provision of assurance about financial information primarily used by managers, investors, tax authorities and other decision makers to make resource allocation decisions within companies, organizations, and public agencies. The terms derive from the use of financial accounts.
Accounting is the discipline of measuring, communicating and interpreting financial activity. Financial accounting is one branch of accounting and historically has involved processes by which financial information about a business is recorded, classified, summarized, interpreted, and communicated; for public companies, this information is generally publicly-accessible.
Budgeting is the specific plans for saving and spending income and these plans, or budgets, are essential for developing spending and saving priorities. Properly preparing a budget also serves as a reference to check how well money is being managed during a period by allowing managers to see actual revenues and expenses compared to budgeted revenues and expenses. Corrective action can be taken earlier in a period when revenue shortfalls or expense excesses are identified..
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Budgets and proper accounting, allow businesses to better utilize the financial resources available to them. To begin with, budgets and proper books of accounts help businesses operate within their means; that is, over the long term, budgets assist businesses in spending less money than they earn. Next, budgets help businesses achieve their financial goals by planning for the future and organizing money into categories such as income, expenses, and savings.
Conclusively, accounting and budgeting roles and benefits in planning and operation of an organization or business is not negotiable. Failure to adhere to the policy, procedure and management of a business through proper accounting and budgeting will lead to disastrous end of such a business
- Accounting, budgeting and policies and procedures. (by Edward J. Mcmillan).
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