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This course covers the IMA material in much more depth. There will be other companion couses covering every section of the Part 1 exam.The same learning outcomes are covered for the section on Budgeting and Planning but the information is presented in a different fashion. This course will further your preparation for the exam. Planning. Budgeting and Forecasting section of Part 1 Exam multiple-choice questions will be 30% of the one hundred multiple choice questions on the exam.Budgeting and financial forecasting are tools that companies use to establish a plan for where management wants to take the company-budgeting-and whether it is heading in the right direction-financial forecasting.Although budgeting and financial forecasting are often used together, distinct differences exist between the two concepts. Budgeting quantifies the expectation of revenues that a business wants to achieve for a future period, whereas financial forecasting estimates the amount of revenue or income that will be achieved in a future period.KEY TAKEAWAYSBudgeting is the financial direction of where management wants to take the company, helping quantify the expectation of revenues that a business wants to achieve for a future period,Financial forecasting tells whether the company is headed in the right direction, estimating the amount of revenue and income that will be achieved in the future.Budgeting creates a baseline to compare actual results to determine how the results vary from the expected performance.Financial forecasting is used to determine how companies should allocate their budgets for a future period, but unlike budgeting, financial forecasting does not analyze the variance between financial forecasts and actual performance. A budget is an outline of expectations for what a company wants to achieve for a particular period, usually one year. Characteristics of budgeting include:Estimates of revenues and expenses.Expected cash flows.Expected debt reduction.A budget is compared to actual results to calculate the variances between the two figures.Budgeting represents a company's financial position, cash flow, and goals. A company's budget is usually re-evaluated periodically, usually once per fiscal year, depending on how management wants to update the information. Budgeting creates a baseline to compare actual results to determine how the results vary from the expected performance.While most budgets are created for an entire year, that is not a hard-and-fast rule. For some companies, management may need to be flexible and allow the budget to be adjusted throughout the year as business conditions change.Financial ForecastingFinancial forecasting estimates a company's future financial outcomes by examining historical data. Financial forecasting allows management teams to anticipate results based on previous financial data. Characteristics of financial forecasting include:Used to determine how companies should allocate their budgets for a future period. Unlike budgeting, financial forecasting does not analyze the variance between financial forecasts and actual performance.Regularly updated, perhaps monthly or quarterly, when there is a change in operations, inventory, and business plan.Can be created for both short-term and long-term. For example, a company might have quarterly forecasts for revenue. If a customer is lost to the competition, revenue forecasts might need to be updated.A management team can use financial forecasting and take immediate action based on the forecasted data.

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