Types Of Budgets And Financial Reports In Business Management Essay.

1. How many different expenses can you think of that a hospitality business would have a legal requirement to allocate funds to? (I.E. licences, insurances, taxes)
2. Name six (6) different expenses that will vary according to the staffing levels: (Staffing levels are the number of employees and working hours worked)
3. Name six different expenses that DO NOT vary according to staffing levels: (Staffing levels are the number of employees and working hours worked)
4. Give FOUR (4) situations that would cause you to revise a budget
5. Give two specific examples of real situations that may occur which would lead you to review and change the budget for a hospitality business. What effect would these have on the budget and what changes would you make?
6. Name FOUR (4) different ways to communicate major changes of a budget to colleagues and relevant personnel.
7. Detail and explain how information about expenses is collected and used. Give at least THREE (3) sources of expenserecords that you would refer to when monitoring the budget.
8. Detail and explain how budget information is gathered and used. Give at least FOUR (4) sources of income records that you check to monitor the budget.
9. From analyzing budget figures, you notice that food cost Percentage (%) is much higher than budget forecast. Provide FIVE (5) reasons why food cost could be higher than forecast
10. From analyzing the budget figures, you notice some deviations but decide to do nothing about them. Explain the reason why this could be a valid option.
11. You are the Restaurant Manager for one of the restaurants in Grand Hyatt in Melbourne. The F&B Manager asks you for a meeting to discuss next year’s budget. What sort of information or topics would you expect to have on your agenda?
12. Describe a circumstance which would lead you to increase targets in the budget. Explain your reasons.
13. Describe the following types of financial records and their usage

*Bank deposit documentation-

*Bank statements-

*Banking summaries-

*Business activity statements-

*Cheque books-

* Credit card transaction statements-

* Invoices-

*Journal entries-

*Labour and wages reports-

*Merchant statements-

*Merchant summaries-

*Transaction reports-

14. Describe the following types of budgets

*Cash budgets-

*Cash flow budgets-

*Departmental Budgets-

*Event budgets-

*Project budgets-

*Purchasing budgets-

* Sales budgets-

*Wage budgets-

*Statistical reports-

*Whole of organization budgets-

15. Detail TWO (2) circumstances which would lead you to lower targets in the budget. Explain your reasons why you should lower your budget targets.
16. What factors do you need to keep into consideration when preparing financial and statistical reports?
17. Choose an accounting software programme that helps you manage budgets, detail the characteristics and functions the software can assist with.
18. Why is important to control budgets? As a Finance manager how often should you report and control them?
19. Describe how using a budget can help to maximize profit.
20. What do you understand by the term “cash flow”
21. What transaction activities could you have within these frequencies?

• Weekly:
• Daily:
• Monthly:

22. In a restaurant, what should be included as wastage?
23. What are “commission earnings”?
24. What is the “variance” from a budget?
25. Define the following and include their purpose 

Bank deposit documentation

1.Hospitality businesses require to controlling costs and set budgets for every area of operation in general. Legal requirements included allocating funds to a number of mandatory taxes and liabilities (Henry, 2017). Legal aspects in which the companies require to allocate funds in include:

Insurance premiums

Negotiation of service taxes

Real estate taxes

Energy management and consumption taxes

Service taxes to labourers and builders for maintenance of pieces of furniture, fixtures and equipment.

Funds for renewing or obtaining new license

2.Variable costs are defined as the costs incurred by an organization which are not fixed with time. The expenses in an organizationoperating in the hospitality industry which varies with the staffing levels are included in the variable costs segment under the budget. Some examples of variable costs for a commercial company in the hospitality industry may include:

Direct labour costs

Staff salaries

Commissions and incentives

Training costs

Billable staff wages

Medical insurance costs

3.Some expenses that do not vary with the variable staff levels and charging of the labourers are:

Funds for intangible assets

Depreciation costs

Insurance

Expense on interest payments

Rents

Costs of general utility facilities such as electricity, internet and phone bills

4.Budget revisions can be required if there are unexpected outcomes faced by the company repeatedly. Some of the reasons for considering budget revision may include:

Sudden changes in the external factors of the organisation affecting the financial performance

Mismatch in the expected outcomes indicating some miscalculation within the budget

Required redistribution of funds depending on additional expenditures (Jacobs et al.2018)

Controlling expenses due to increased incomes and deciding about investments after reaching financial targets

5.In a business in the hospitality industry, budget making is the primary step included in the forecasting process. At some points, budget revisions are required as the expected performances do not match the actual results. Therefore, in hospitality businesses, a budget revision might be required insome specific situations such as:

The number of rooms booked per day surpasses the estimated numbers in the budget which can change the whole framework of revenue collection (Ross and Harrington, 2016).

6.If there is a sudden and unanticipated increase in attrition rate, then the budget will have to be reviewed in order to employ and train new employees. In this case, hiring costs and training costs will have to be included in the budget.

7.It is required to notify each and every department in an organisation about the proposed changes. The ways to communicate budget changes within an organisation in the hospitality industry can be of either verbal or non-verbal form (Fao.org, 2018). The non-verbal formats included communication of the changes in the budget through written documents on paper. Some means communications include:

Bank statements

Involving entire teams and clarifying their needs according to the forecasted budget. Live presentation is one of the most used means of communicating budget alterations.

Financial changes may also be broadcasted to all parts of an organisation through the use of organisation website or official social media

Budget changes can also be notified to all workers through use of official letters or mails non-verbally.

Team meetings are also prevalent ways to communicate budget changes in hospitality organisations.
 

8.Difference accounting related data is required for controlling and monitoring expenses of both small and large scale businesses. According to Fitriany et al.(2015) accounting records need to be maintained and updated regularly considering compliance with legislation and measures of progress. While monitoring and altering budgets for an organisation it is essential to keep track of a variable number of expense records. Some of the most important sources of expense records are:

Accounting records including financial statements and business ratios

Bank statements such as tax filings and payment dues

Insurance documents such as business liability policies or renter’s insurances

9.Successful budget creation is based on the previous trends in performances and incomes of business organisationsin the hospitality industry and therefore access to all sorts of income statements are necessary for predicting the future expenses and profits of the company. Types of income records needed for monitoring the budget for any organization include:

Income statements with all details of expenditure

Cash flow statement showing amounts of revenue collected

Sales invoices for timing of receipts

Receipts of grants from the government

10.Surpassing costs for food and raw materials is one of the most common issues faced by restaurants in general. Therefore may be multiple reasons behind such extra costing for foods. Some of the reasons causing increased food costs in restaurants are:

Increased costs of buying ingredients from a single vendor or supplier

Failure to mix high and low-cost ingredients accordingly

Employee theft of foods items especially in restaurants with unmonitored walk-in refrigerators

Ineffective portion control techniques used by the workers

Poor staff training regarding bookkeeping about schedules when the ingredients are bought and at which prices.

11.Variances in the budget forecasting and actual sales are inevitable in all businesses. There are both positive and adverse unfavourable impacts of deviations on the performance of the companies. However, all deviations do not result in negative impacts on the performances. For example, if the actual sales figures exceed the forecasted figures, it actually has positive impacts on the performance (Ter Bogt et al. 2015). Therefore such deviations can be ignored and budget revisions are not required. Contradicting to this, in monitoring expenses, if the actual expenses exceed the forecasted values, it has negative impacts on the financial performance of the company. Such deviation requires attention as they hinder overall incomes of the company

Business activity statements

12.Budget meetings are essential for large scale hospitality businesses such as hotels as this builds awareness about the overhead expenses in the organisation and how the next year's expenditures can be managed according to the previous historical data. Therefore the information topics that need to be covered in the said budget meeting may include:

Previous years bank statements

Present invoices

Balance sheets

Ledgers

Previous non-profitable debts

Penalties

Fines to be paid and upcoming taxes

Further pieces of information about breakouts and overhead new construction budgets (if any)

Projected revenues may also be discussed in such meetings

13. Budgets reflect on previous performance trends in the company's finances and predict the performance in future. Sometimes, some years or phases can experience more sales and increased incomes as compared to usual performance levels. If certain sections of the organisations are performing better than expected, then it can be expected that placing more targets can be sustained effectively (Beeler et al.2015). For example, if a company exceeds targeted sales in every quarter of a year, it may be feasible that in the next budget, the targets can be increased in order to achieve higher levels of income and maintain the motivation levels of the workers.
 

14.Uses of Financial records:

Bank deposit documentation - used for documenting the information included in deposit transaction by the depositor

Bank statements- Documents monthly record of activities in the account including cheques issued, withdrawals, credits, interests and service charges

Banking summaries- This report is used in daily balancing procedure which enables cross-referencing of deposits and creating three-way balances

Business activity statements- These statements are used for paying goods and services taxes (GST) and other tax instalments (Miao et al.2017).

Cheque books-Used for drawing depositing or granting money directly from the account of the issuer.

Credit card transaction statements- Reports drawn amounts and available balance of the user in the linked account

Invoices- Used in accounting to record sales and prices

Journal entries- Special procedure in bookkeeping used in accounting containing all financial transaction related details

Labour and wages reports- Used for recording employee names working under a particular organisation and their gross wages against the number of hours worked.

Merchant statements- Records a merchant’s fees and transaction counts.

Merchant summaries- Merchant summary reports are used for showing transactions in each account, total amounts processed by each merchant gateway and average amounts per credit card.

Cheque books

Transaction reports- Used for supervisory purposes by financial regulatory bodies regarding individual transactions in accounts.

15.Types of budget:

Cash budgets- Cash budgets are budget plans for expected cash inflows and outflows which are formulated according to overall expenses and revenues collected.

Cash flow budgets- Cash flow budget is the estimated cash inflow and outflow for a business within a particular time- period assessing availability of cash required for future operations

Departmental Budgets- Departmental budget is a budget predicting expenses and incomes of a particular department within an organisation over a certain period of time (Weygandt et al. 2015).

Event budgets- Event budget is forecast for expenses and incomes involved in a particular event.

Project budgets- Project budget is allocated resources and funds for a certain project in specific areas of application.

Purchasing budgets- Purchasing budget is a financial plan for documenting estimated costs for the maintenance of inventory.

Sales budgets- Sales budget is the estimated sales for the consequent financial periods.

Wage budgets- Part of annual or quarterly expenditure involved in remunerating labourers in an organization is called sales budget. 

Statistical reports- A report consisting of multiple raw data sets about the performances of the company in terms of sales and profitability.

The whole of organization budgets- This type of budget is the aggregate of all departmental budgets and is aimed a representing the overall financial health and activity of an organisation.

16.There may be many situations where lowering of targets might be required in a budget. For example, in some cases, due to changes in the external factors such as interest rates in business loans, some targets set in previously might not be achievable in limited times. In such cases lowering of target may be required. Such requirement may also occur in case of lower demand for services or products or emergence of new providers of similar services.

17.Some factors that need to be considered while preparing financial and statistical reports are:

Inventory

Sales activities

Working capital

Asset status

Accounts receivable

External environments

18.Budget Maestro is a popular software program used or budgeting in businesses. It provides driver based modelling and effective forecasting without any hassle. It also has features such as Expense budgeting, workforce planning, capital asset planning, revenue calculations and sales forecasting.

19.Budgeting and control of expense is essential for all purposes in business since this helps in ensuring that the available funds and expenditure within the company are adequate and accordingly done (Fao.org, 2018). Budgetary control report may be generated yearly, monthly or quarterly as per requirement of the firm.

Credit card transaction statements

20.Formulating budget helps in profit maximisation of a firm by improving the value of wealth of the shareholders. It also helps in greater earnings through timely recognition of risks associated with cash flows

21.Cash flow refers to the total sum of cash being transmitted in and out of the business particularly acting as effective liquidity.

22.Weekly: purchase invoices, cash receipts and account statements

Daily: Sales transactions and purchases

Monthly: Revenue losses, average gross margin and average cost per order 

23.Restaurant wastes can be classified as follows:

Kitchen wastes

Electronic waste

Paper and packaging wastages

Prepared food wastes

24.Commissions earnings are sums of money provided for the completion of tasks such as goods or services on behalf of another individual or company.

25.Variance in a budget is the difference between the actual amounts of sales or expenses and the forecasted amounts in the budget.

Financial report	Definition	Purpose
Budget	Estimated income and expenditure for particular time-period	Used for forecasting incomes, expenditures and profitability of a firm
Covers	Insurance coverage measuring the safety margin for a firm	Used for protecting the overall market value of the firm
Expenditure	The action of spending funds and assets	For identifying the nature of transactions and their uses
Labour	Work of tasks done by employees	Enabling employees to be financially adequate
Occupancy rate	The ratio of used space to the available space for business	Can act as indicators of success and monitoring demand
Purchases	The act of buying goods and raw materials	Provides cost-saving functions
Sales	The action of selling products or services for money	For helping customers solve their own problems by buying
Stock	Capital raised by companies through shares	Useful in issuing new investment shares in future
Transaction	The complete event of selling and obtaining money in exchange	Save information about total number of monetary exchanges
Transaction exempted	Type of transactions involving securities exchange that do not need compliance with legislation	To avoid registration with Securities Exchange  Commission (SEC)
Unit sold	Quantification of Sales earned by a firm in a particular reporting period	Used for total revenue calculation
Wages	Regular payment provided for work	Paid in return for work

Reference List

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