From the course: Accounting Foundations: Managerial Accounting
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Who needs a budget?
From the course: Accounting Foundations: Managerial Accounting
Who needs a budget?
- All right, name an old company. - Old company? Okay, General Electric. They've been around since 1878 when Thomas Edison started the Edison Electric Light Company. - Perfect, General Electric is an old company. Let's compare this old company, GE, to a brand new company, a startup company. A company that involves just two partners, 10 employees and lots of exciting ideas. - I've got it. - Now which of these two companies, the old one or the new one, is likely to have a more comprehensive, sophisticated budgeting process? - Well that's easy, the old company, General Electric has a very elaborate budgeting process. The startup company, they probably have never taken the time to make any kind of budget at all. - Exactly. Now, which of these two companies really needs a budget? The old company or the new startup company? - They both need a budget. - Sure, but which one needs a budget more? Let me put it this way, if…
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