Pre-requisites for effective budgetary control system, Financial Management

Assignment Help:

ORGANISATION FOR BUDGETARY CONTROL (or) PRE-REQUISITES FOR THE INTRODUCTION OF AN EFFECTIVE BUDGETARY CONTROL SYSTEM

1.   BUDGET CENTRE:  It is a section of the organization of an undertaking defined for the reason of budgetary control.

2. ORGANISATION CHART: A correctly drawn organizational chart shows the functional responsibilities of every member of management and make sure that she/he knows her / his position in the organization and his relationship with others.

3. BUDGET COMMITTEE: It includes all executives in charge of important functions and entrusted with the preparation and finalization of budgets for several centers and also for the whole company called Master budget. usually, the CEO of the company is the Chairman of the committee and executives in charge of main functions of the business are the members.

4.   BUDGET MANUAL:  It is a rulebook or document, which provides for instructions in framing the budgets. It is described as - 'a document which sets out the responsibilities of the persons busy in the routine of and the forms and records required for budgetary control'.

5.   BUDGET PERIOD: It is the period of a budget, which usually is one year.  It is the time period for which the budget is used and prepared.

6.   PRINCIPAL BUDGET FACTOR / KEY FACTOR /LIMITING FACTOR / GOVERNING FACTOR:  It refers to the factor which dominates the business operations and which acts as a barrier or impediment in accomplishing the wanted result specified in the company's budget.  It will limit the activities of an undertaking.  It generally refers to any factor, which is in short supply like demand, stock, etc.  To make sure that the functional budgets are reasonably fulfilled, the degree of the influence of this factor must be first assessed.


Related Discussions:- Pre-requisites for effective budgetary control system

Find out the current stock price, Great Pumpkin Farms just paid a dividend ...

Great Pumpkin Farms just paid a dividend of $3.50 on its stock. The growth rate in dividends is expected to be a constant 5 percent per year indefinitely.  Investors require a 16 p

Differance between forward start option and a package, 1 Explain the differ...

1 Explain the difference between a forward start option and a package. Outperformance certificates are offered to investors by many European banks as a way of investing in a com

Timing of financial reports, Timing of Financial Reports: Just as the a...

Timing of Financial Reports: Just as the actual report requirements differ depending on the requirements of the stakeholder that will be using them, so too will the timing of t

Business organization, what business organization do you preffer ? service ...

what business organization do you preffer ? service concern,trading concern or manufacturing concern

Determine wacc- net operating cash flow- npv- irr-pi, Prepare a capital bud...

Prepare a capital budget analysis of the following data, your analysis should determine WACC, Net Operating Cash Flow, NPV, IRR, PI, and Payback analysis. This analysis is for t

measuring yield spreads, A yield spread between any two bond issues ...

A yield spread between any two bond issues can be easily computed when the maturity date for both these issues is same. The yield spread between these two bond

Explain the terminologies of finance, Explain the terminologies of finance ...

Explain the terminologies of finance Raise and efficiently utilise funds which are your disposal (or at least try to).That a business organisation also needs to do the same can

Define how can estimate expected incremental cash flows, How do we estimate...

How do we estimate expected incremental cash flows for a proposed capital budgeting project? We calculate expected incremental cash flows for a planned project by estimating the

What is the exit strategy for equity stake venture, What is the Exit strate...

What is the Exit strategy for equity stake venture Exit strategy for equity stake venture capitalists and other financiers may include: (i) Selling their shares to the publ

Eurobonds, The term 'Eurobonds' refers to bonds issued and sold outsi...

The term 'Eurobonds' refers to bonds issued and sold outside the home country of the currency. For example, a dollar denominated bond issued in the UK is a Euro (

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