Managerial Accounting: Budgeting for Short and Long-Term Goals - Essay Sample

Introduction

Managerial accounting is a crucial aspect that influences how an individual operates. Budgeting is one of the essential processes that give an individual direction and forms the base for objectives formulation. In this case, budgeting is a quantitative plan in the form of a monetary term that outlines all aspects of the coming accounting years (Bogsnes 3). Through the process, an individual is able to effectively prepare both short and long terms that dictate its functions. According to Koszegi and Filip, budgeting forms a ground that influences the planning and management, thus influencing productivity (1204). As such, it forms the base for future individual performance. Due to income variation, budget impact the kind of activities individuals engage. The report reviews how budgeting positively and negatively impacts human behaviors.

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Usually, budgeting enacts positive behaviors among individuals when their objectives operate within the intended level. In this case, budgeting impacts individuals to attain or near attain their goals as it formulates clear ways of resource distribution (Bogsnes 90). When goals are attained according to the budget, individuals tend to develop trust and positive perceptions toward the manager (Koszegi and Filip 1179). Such a budget induce and motivate other individuals toward participating in activities as they strive to improve their performance (Bogsnes 41). Motivation ensures all individuals operate toward a particular goal, thus increasing the chances of improving their income rate (Koszegi and Filip 1189). Additionally, budgeting promotes positive behaviors due to frequent feedback on performance. As such, individuals tend to develop realistic standards, which promote collaboration, thus enhancing management. The approach reduces the chances of managerial failure due to effective handling techniques.

On the other hand, budgeting negatively affects human behaviors, especially when individuals experience challenges during the implementation. Implementation is a critical aspect that requires the plan idea to be put into action (Koszegi and Filip 1182). When implementation challenges occur, there is a high chance that budgeting may trigger individual conflict, which impacts how activities are conducted. In such a case, an individual develops a negative attitude, which hinders their desire to participate in the day to day activities (Bogsnes 182). Squeezing all smidgen of productivity tends to affect performance due to a lack of a better connection between incomes and demand (Koszegi and Filip 1201). As such, an individual tends to shift and engage other activities, which hinder the attainment of the goals. In this case, workers reduce their participation in various activities due to a lack of enough capital (Bogsnes 12). Additionally, budgeting reduces individuals’ flexibility as they are required to follow a particular pattern within the income level. Hence, it becomes challenging for individuals to change; thus, they cannot enjoy opportunities that are not indicated in the budget (Koszegi and Filip 1170).

Conclusion

In conclusion, budgeting is a crucial aspect that influences the kind of activities individuals to engage in. Attainment of objective motivates individuals to work hard as they strive to improve performance. Despite budgeting being an essential aspect of management, it negatively influences how individuals operate. In this case, budgeting hinders the connection between income and demand, which unmotivated individuals. The approach affects how activities are conducted within the organization. As a way of enhancing budgeting, individuals are required to operate within the income rate. The approach will assist in avoiding overspending.

Works Cited

Bogsnes, Bjarte. Implementing Beyond Budgeting: Unlocking the Performance Potential. John Wiley & Sons, 2016.

Koszegi, Botond, and Filip Matejka. "Choice Simplification: A Theory of Mental Budgeting and Naive Diversification." The Quarterly Journal of Economics 135.2 (2020): 1153-1207. https://academic.oup.com/qje/article/135/2/1153/5695765. Accessed on 20th May 2020.