Budgetary Planning and Control - Accounting Techniques

A budget is a   plan of action expressed in monetary terms. Therefore it is a quantified plan of what one intends to do.

All business must prepare a budget that is a document which has:

1. Quantify the strategy that management has decided to implement in order to achieve the business objectives for a future period. The budget will signify planned expenditure and income and may be analyzed to involve details for each product department and type;

2. Offer a base for control cycle; the control cycle is as given:

• Establish the plan or budget
• Measure real performance
• Compare plan along with real performance
• Take corrective action like required

3. Provide a mechanism via such management responsibility may be matched along with the budgetary information and assisted with the budgetary control cycle.