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

State the working capital turnover ratio, State the Working capital turnove...

State the Working capital turnover ratio  Meaning: this ratio establishes a relation ship among net sales and working capital. Working capital turnover ratio shows the vel

Feedback control system, Feedback Control System Feedback is informatio...

Feedback Control System Feedback is information about actual achievements or actual results produced within the organization (e.g. management control reports) with the purpose

Budget and Budgetary Control, I am to write thesis on Budget and Budgetary ...

I am to write thesis on Budget and Budgetary Contro. Can you please help me with contents and notes?

Calculate transfer price - management control system, Calculate Transfer Pr...

Calculate Transfer Price - Management Control System? Question: Compute the Transfer Price for Product X and Y and the Standard Cost of Product Z as the intra company pricing r

Explain prerequisites of a sound variances analysis system, Prerequisites o...

Prerequisites of a sound variances analysis system A variance analysis system would be good enough in controlling costs and evaluation performances if the following requirement

Predetermined Overhead, SSI, a meat/burger/chicken processing manufacturing...

SSI, a meat/burger/chicken processing manufacturing plant loacted in Idaho, USA prepares

Homework.., given the above data what would the breakeven in units and doll...

given the above data what would the breakeven in units and dollars be if u wanted a necessary after tax profit of $ 36,000 (assume a 30% tax rate ) units __________ ales dollars _

.Sale Budget, I need to complete a sale Budget; however I don''t have the s...

I need to complete a sale Budget; however I don''t have the sale price, I have the actual and Budgeted sales dollar Data0Sales Budget, and The following actual information that rel

Cash planning, Firms need cash to invest in inventory, receivables and fixe...

Firms need cash to invest in inventory, receivables and fixed assets and to create payments for operating expenses, so as to increase earnings and sales and make sure the smooth ru

Current cost acconting, critically examine the current cost accounting for ...

critically examine the current cost accounting for price level changes

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