Arrange the following steps of the Budgeting process in the proper sequence:

A. Obtaining estimates
B. Communicating Budget
C. Reporting Interim Progress towards budget objectives
D. Implementing the budget plan
E. Co-ordinating estimate

Choose the correct answer from the options given below:

Correct option is D

The correct sequence of the budgeting process is A → E → B → D → C:

1. A. Obtaining estimates – The first step is gathering necessary estimates of revenues and expenses from various departments or units within the organization.

2. E. Co-ordinating estimate – After collecting individual estimates, the next step is to co-ordinate and reconcile them to ensure consistency, remove duplication, and align with the organizational goals.

3. B. Communicating Budget – Once the budget is finalized after coordination, it needs to be communicated to all relevant departments and stakeholders for implementation.

4. D. Implementing the budget plan – After communication, the departments execute the budgeted activities and manage operations according to the financial plan.

5. C. Reporting Interim Progress – Finally, the organization monitors and evaluates performance periodically by comparing actual outcomes with the budget and making necessary adjustments.

Each step naturally flows into the next and forms a cycle of financial planning, execution, and control.

Information Booster:

• Budgeting is a comprehensive financial planning tool that helps organizations allocate resources effectively.

• Obtaining estimates involves inputs from all levels of management and is foundational to budgeting.

• Co-ordination of estimates ensures integration across departments for a realistic and unified financial plan.

• Communication of the finalized budget enhances transparency and accountability across the organization.

• Implementation is crucial as it translates financial plans into actions.

• Interim reporting serves as a feedback mechanism, allowing corrective actions to remain on course.