KCQ – Chapter 7

Budget for the short-term

I loved this chapter and it has been one of my favourites reads so far for this unit. Particularly because I love budgeting and looking at ways to save bucket loads of money in the smallest amount of time possible. This chapter actually revealed some key things about budgeting that I suppose I didn’t really recognise, like the reasons for budgeting as I have had my own thoughts on why people budget and why I choose to budget so it was nice reading and learning about how important it is to a business as well was quite interesting.

I always looked at budgeting through the perspective of an individual and not so much for a business, so it was enlightening to read the different advantages that budgeting has for businesses and how it lets everyone see the business in the overall objectives of the firm.

A part of the chapter that I particularly liked was the section on how to prepare a budget. I am constantly preparing new budgets for myself because I often times find that sometimes I create a budget for myself that is not realistic and I end up not sticking to the budget after about a month or so, because apparently saving $5,000.00 in less than 2 months on $512.32 a week is just not realistic when you have fuel, food, bills and other necessities to pay for. So, seeing the heading “preparing budgets” was a relief to me and I felt interested in reading it, not even just for the sake of the assignment but for my own personal knowledge too. Although when I see the ‘Sales and production budgets’ I quickly remembered that I was not going to necessarily get tips on how to budget as an individual, but learning about budgeting for business was still intriguing and I’ve find ways to implement business strategies into my own personal life. The equation ‘Production + Opening Inventory = Sales + Closing inventory’ I found relatively easy to comprehend. I liked the way Martin explained the different parts separately and then all together. That really helped my grasp my understanding that open inventory is how much the product they have at the beginning of the year and that product is how much is produced in this time really helps me to understand the equation.

Reading the section about ‘Budgeting for cash and income’ I honestly thought there would be more involved in this part so I was surprised to find that there was not too much to it. It did take me some time to read it but there were some pretty interesting things like the budgeted income statements and how that is pretty much just pulling together various functional budgets of the firm to form an overall statement. Again, I thought when reading ‘Budget income statements’ I thought there would be a whole lot more to go with it however I was happy and surprised to find out that that is all it was. I suppose I was a bit startled at this section of the chapter at first glance because tables with lots of numbers can be confusing and a bit intimidating at first, but by having a read of this chapter first gave the confidence and base knowledge to really understand what the table is demonstrating.

The next section ‘Responding quickly to surprises’ was a really intriguing piece of text and I actually took a lot away from it. My boyfriend’s dad is the CEO of a company and he always tells me things like what this section was based on, how companies have to respond quickly to ‘surprises’ or to any kind of tragedy or thing that could potentially harm the business and knowing how to deal with them is key. So, it was nice to read about and gain more insight so maybe next time he talks to me about it I can share some information with him. Although my boyfriend’s dad does talk a lot about how businesses run in general because he knows I am fascinated by those things, this text help me understand just how a business actually gets back on track after being surprised or hit with a curve ball as I would say. I thought it was interesting to read how businesses are better off breaking down into smaller bit so it is easier to digest the business activity and performance levels, so when something is not going right, as a business you can narrow down where the issue is coming from and work towards fixing it. I really enjoyed reading this part of the chapter as well because of how interesting it was and how easily I could comprehend and digest the information. I think I can thank my boyfriend’s dad for that too as I had a bit of background knowledge coming into this section of the text so that sense of familiarity really helped too. Overall, I really like how easy I found this chapter to read and understand, normally I have to re-read chapters and go over sentences a million times to understand what I am learning but I think because of my interest in budgeting and wanting to know more about saving money helped me understand it quicker and some of the content I already knew about thanks to my boyfriend’s dad helped me come into this chapter with a sense of familiarity.