Importance of a budget, Managerial Accounting

Assignment Help:

Importance of a budget

A Budget is a plan expressed in monetary terms. It is prepared prior to the budget period and may show income, expenses and the capital to be used i.e. a budget is what the company wants to happen as opposed to a forecast which is what is likely to happen.

The budget may be prepared for the following reasons:

1) As a planning aid

2) To communicate ideas and plans to everyone affected by them

3) To co-ordinate the activities of different departments or sub-units in the organization

4) To provide the framework for responsibility accounting whereby managers of budget centers are made responsible for the achievement of budget targets for the operations under their personal control.

5) To establish a system of controls by setting up targets against which actual results will be compared.

6) To motivate employees to improve performance.

Budgetary control is the foundation of budgets relating the responsibility of executives to the requirements of a policy and the continuous comparison of actual and budgeted results either to service by individual action the objectives of that policy or to provide a basis for its revision.


Related Discussions:- Importance of a budget

Advantages-disadvantages-imposed budgets, Advantages of Imposed budgets ...

Advantages of Imposed budgets Advantages: They increase the probability that the organization strategic plans are incorporated into the planned activities. They

Algebraic analysis, ALGEBRAIC ANALYSIS The supposition of linear cost b...

ALGEBRAIC ANALYSIS The supposition of linear cost behavior allows use of straight-line graphs and simple linear algebra in cost-volume study. The net cost is a semi-variable c

Prepare an approximation of working capital requirements, On 1st January, 2...

On 1st January, 2005 the Board of Directors of Paushak Limited needed to identify the amount of working capital needed to meet the programme they have arranged for the year. From t

Industrial Grinders, accepted#Regarding the Overhead costs, these are alloc...

accepted#Regarding the Overhead costs, these are allocated based on Direct Labor;

Extensions to linear programming, Extensions to Linear Programming In man...

Extensions to Linear Programming In many real situations the solutions to linear programming models make sense only if they have integer values. Rounding off the linear programmi

Concentration banking, When the customers of the company are spread over br...

When the customers of the company are spread over broad geographical areas then in place of a particular collection centre the company opens collection centres at the regional stag

Explain the stock turnover ratio, Stock turnover ratio  Meaning: thi...

Stock turnover ratio  Meaning: this ratio establishes a relation ship between costs of goods sold and average inventory. Objective: the objective of component of this r

Corporate Governance., Discuss the dominant compensation philosophy, share ...

Discuss the dominant compensation philosophy, share value creation and the link between company size and executive pay. Solve Parmalat''s case, which may be found in reading No. 8.

Capital budgeting, what is the computation procedure of accounting rate of ...

what is the computation procedure of accounting rate of return?

Questions., how long will it take to get answers after question are submitt...

how long will it take to get answers after question are submitted

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd