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

Advantage of weighted average cost of capital, Advantage of Weighted Averag...

Advantage of Weighted Average Cost of capital 1) Straight Forward and logical: Weighted Average ost of Capital defines the oveall cost of capital as the sum of the cost of t

Bond ., The salem company bond currently sells for $955 has a 12% coupon i...

The salem company bond currently sells for $955 has a 12% coupon interest rate and $ 1000 par value pays interest annually an

What are financial markets? why do they exist?, What are financial markets?...

What are financial markets? Why do they exist? Monetary markets are where financial securities are sold and bought.  They exist mainly to bring surplus economic units (those ha

Determine the weighted average cost of capital, To evaluate a company using...

To evaluate a company using enterprise discounted cash flow (DCF), we discount free cash flow by the weighted average cost of capital (WACC). The weighted average cost of capital r

Calculate the companys horizon value, A. Mitt starts Examine Your Zipper In...

A. Mitt starts Examine Your Zipper Incorporated ("XYZ") in 2012 by selling common stock of $12,000,000. He promises the investors in his company a 15% return on their capital. B

Assets, Assets Pension insurance companies' assets can be divided into ...

Assets Pension insurance companies' assets can be divided into five main investment classes: cash, long-term bonds, stocks, property and loans. The total returns on the assets

Partition of investment risk, Partition of Investment Risk The expecte...

Partition of Investment Risk The expected returns and the fluctuation in returns are two factors in evaluating investments. Expected Returns While the actual returns

Weak form level of efficiency-forms of efficiency, Weak form level of effic...

Weak form level of efficiency This level states that share prices fully reflect information in historic share price movement and patterns (past information/historic information

Explain the financial accounting techniques, Question 1: (a) Explain f...

Question 1: (a) Explain fully the following financial accounting techniques: i. Cash accounting ii. Accrual accounting iii. Fund accounting iv. B

State the significance of the cost of capital, State the Significance of th...

State the Significance of the Cost of Capital It must be recognized at the outset that cost of capital is one of the most difficult and disputed topics in the finance theory.

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