BUDGET<br />French word ‘bougette’ means leather pouch.<br />In which funds are appropriated for meeting anticipated expenses.<br />Monetary or quantitative expression of plan & policies of operations for specific future period,<br />Targets to be achieved within a specific period,<br />
definition<br />“Budget is an estimate of future needs arranged according to an orderly basis, covering some or all of the activities of an enterprise for definite period of time”- GEORGE R. TERRY<br />“a financial and /or quantitative statement, prepared prior to a defined period of time, of the policy to be pursued during that period for the purpose of a given objective”-ICMA <br />
BUDGETING<br />Process of preparing budgets,<br />Study of business situations,<br />Understanding the management objectives,<br />Understanding the capacity of enterprise.<br />“ The entire process of preparing the budgets is known as budgeting”-BATTY<br />“Budgeting may be said to be the act of building budgets”-ROLAND & HARR<br />
Budgetary control<br />“Budgetary control is a system of controlling costs which includes preparation of budgets, coordinating the department, establishing responsibilities, comparing actual performance with the budgeted, and acting upon the results to achieve maximum profitability”-BROWN & HOWARD<br />
ICMA defines<br />“ The establishment of budgets, relating the responsibilities of executives to the requirements of a policy, and the continuous comparison of the actual with the budgeted results either to secure by individual action the objectives of the policy or to provide a basis for its revision”<br />
Objectives<br />Planning<br />Coordination<br />Efficiency & Economy<br />Increase in profitability<br />Anticipation of future capital expenditure,<br />Control<br />Deviations<br />
Advantages<br />Economy in working<br />Buck –passing avoided,<br />Establishes coordination,<br />Guard against undue optimism,<br />Acts as a safety signal,<br />Adoption of uniform policy,<br />Decrease in production costs,<br />Adoption of standard costing principles,<br />Management by exception,<br />Optimum mix<br />
LIMITATIONS<br />Opposition against the very spirit of budgeting,<br />Budgeting & Changing economy<br />Time factor,<br />Not a substitute for the management,<br />Cooperation & coordination required,<br />Revision required,<br />Uncertainty of futures<br />Depends upon the support level of management,<br />Budgetary revision required<br />
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