Importance of a budget, Managerial Accounting

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.

Posted Date: 12/7/2012 7:56:14 AM | Location : United States







Related Discussions:- Importance of a budget, Assignment Help, Ask Question on Importance of a budget, Get Answer, Expert's Help, Importance of a budget Discussions

Write discussion on Importance of a budget
Your posts are moderated
Related Questions
Discuss the different roles played by the qualitative and quantitative approaches to managerial decision making

Definition of Linear Programming What is Linear Programming

Cyclic Chains: In Markov Chains the current state of the system depends on all previous states. It is a stochastic process.  Sometimes transition probability matrices are diff

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

X's Strategy X will like to divide his play between his rows in such a way that his expected winnings or losses when Y plays the first column will be equal to his expected winn

What story or character in a story generated what Aristotle calls a "catharsis?" Describe your emotional response. What specifically caused your emotional response?

how do i calculate the actuarial gains or losses on the present value of plan obligations?


Battle of the Sexes game To understand Battle of the Sexes game, let’s consider a story as follows: Two players (a couple) wish to go to an event together but disagree about

Explain Skimming pricing It is one of the most commonly discussed pricing method is the skimming pricing. This pricing method to the firm's desires to skim the market by sellin