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

Break even analysis, BREAK EVEN ANALYSIS Break even analysis is mainly us...

BREAK EVEN ANALYSIS Break even analysis is mainly used to explain the relationship between the cost incurred, the volume operated at and the profit earned. To compute the breakev

Balanced score card, Balanced Score Card This is a popular approach in ...

Balanced Score Card This is a popular approach in current management thinking which consists of a variety of indicators both financial and non-financial. The balanced scorecard

Classification of costs, discuss which of the cost classification is suitab...

discuss which of the cost classification is suitable for LunchBreak LTD and why?

Determine the absolute liquid ratio - liquidity ratios, Absolute liquid rat...

Absolute liquid ratio - Liquidity ratios Although receivables debtors and bills receivable are usually more liquid than inventories yet there may be doubts regarding their rea

Determine the cash flow budget - monthly cash disbursement, where can I get...

where can I get the solution for the question on this link: http://www.expertsmind.com/questions/determine-the-cash-flow-budget-monthly-cash-disbursement-30145416.aspx I have att

Cost, Stellar Packaging Products and its primary customer, Estrella Coffee,...

Stellar Packaging Products and its primary customer, Estrella Coffee, are deciding on appropriate costing systems for their operations. Stellar Packaging Products’ manufacturing is

Prepare an estimation of working capital, Prepare an estimation of working ...

Prepare an estimation of working capital needs from the subsequent information of a trading relates with: (a) Projected Annual Sales 1,00,000

Case law & study, You are charged with describing the important considerati...

You are charged with describing the important considerations in the decision-making process to upper management. In your response, be sure to include the following: • A descript

Cash discount, Cash discount is given to buyers to bring them to make promp...

Cash discount is given to buyers to bring them to make prompt payment. The credit terms identify the percentage discount and the period throughout which it is obtainable. Liberal c

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

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