From the course: Accounting Foundations: Budgeting

Harness the power of budgets to solve problems

From the course: Accounting Foundations: Budgeting

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Harness the power of budgets to solve problems

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- Hi, I'm Jim Stice, I'm a professor of accounting at Brigham Young University. This is my brother Kay. - I'm also a professor of accounting at Brigham Young University. - In this course, we discuss budgeting with a focus on budgeting in businesses. - Now the word budget scares many people. They have nightmares of forms and spreadsheets and oppression, but really budgeting just involves making a numerical plan and writing it down. - Young growing companies don't have a long history of organizational inertia to guide manager decisions. Such companies need to harness the power of budgeting to identify and solve problems on paper before those problems actually arise in the real world. - In addition, these budget numbers provide informed benchmarks to use in evaluating subsequent actual performance. - [Jim] This course demonstrates the construction of purchase budgets, production budgets, hiring budgets, and overhead budgets. - This course also covers my favorite budget, the cash budget. Now before taking this budgeting course, you might consider taking our Accounting Fundamentals course. Among other things, that course introduces you to the basics of all three major types of accounting. Managerial, financial, and income tax. - Now with that said, we've designed this budgeting course to be self-contained, and we carefully explain any terminology that we use. - In short, this is an introductory course with no prior accounting knowledge necessary. - Now, running an organization without a budget is a very exciting exercise. - From one day to the next, you have no idea what's coming. - Every morning, you wake up to a whole new collection of surprises. - Now that's one way to run an organization. A different way is to spend some time carefully constructing a numerical plan, a budget. - Yeah, there'll be surprises but you'll have a framework, a plan, a budget within which to adapt to those surprises. - Let's learn about budgeting.

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