Budgeting for planning
Concept of budget
The three important functions of management are planning, operating and
control, planning relates to the future, operating to the present and controlling
to the past and future activities. For assisting the management in the functions
of planning and control, two techniques with an applied i.e. building and stand
ard costing systems. Planning is generally worked with an arrangement of
standard costing in this manner both the frameworks are thing related yet
these frameworks are not in reliance.
to the past and future activities. For assisting the management in the functions
of planning and control, two techniques with an applied i.e. building and stand
ard costing systems. Planning is generally worked with an arrangement of
standard costing in this manner both the frameworks are thing related yet
these frameworks are not in reliance.
Generally, the word budget is computed with the limitation on spending.
For example, the government approves spending budgets for their various
bodies. Then they expect the bodies to keep their expenditures within the
limit prescribed by the budget. In contract, many business organizations
use the budget to focus alternation on company operations and finances.
Not simply to constrain spending, spending plans features potential issues
and preferences early, enabling the director to make strides to avoid these
problems and advantages early, allowing the manager to take steps to
avoid these problems or use the advantages wisely.
A budget is a tool helps the manager in planning and control functions.
In strangely, it helps by utilizing control capacities looking forward as well
as looking in reverse. The financial plan, obviously, manages what chief's
arrangement for what's to come. However, it can also use to evaluate what
happened in the past. It is a benchmark that allows managers to compare
actual performance with estimated or desired performances.
According to the chartered institute of Management Accountants,
Chandigarh, "a financial statement or a qualitative statement prepared and
approved prior to a defined period of time of the policy to be purpose during
that period for the purpose of attaining a given objective.There are many
numbers of financial accounting software. These software training provided
with others ERP software training as well.
As per R.H Garrison, " A financial plan is the nitty gritty arrangement laying
out the procurement and utilization of money related and different assets
over some given day and age. It represents the plan for the future expressed
in formal quantities term. The act of preparing a budget is called
in formal quantities term. The act of preparing a budget is called
budgeting. The uses of the budget to control firm's activities are known as
budgetary control."
Recent surveys show just how valuable budget can be study after study
has shown the budget to be the most widely nursed and highest rated tools
for cost reduction and control, advantages of budgeting go so far as to as to
claim that the process of budgeting forces a manager to become a better
administrator and puts panning in the forefront of the manager's mind.
Actually, many seemingly health businesses have closed down because
managers failed to draw up, monitor and adjust budgets to changing
conditions.
Thus, budget refers to 'accounting for future'. Planning abridged the
evaluated consequence of future exchanges for the whole organization
in much an indistinguishable way from the Accounting procedure records
and outlines the aftereffects of finished exchanges.
evaluated consequence of future exchanges for the whole organization
in much an indistinguishable way from the Accounting procedure records
and outlines the aftereffects of finished exchanges.
Feature of budget
A. budget includes the following features or essentials:
a.Budget is a plan: a budget is an expression of the plan of the operation of
an enterprise. The operations of eateries are affected by a number of
factors both external (such as general business conditions, government
policy, and size as well as the composition of the population) and internet
(such as manufacturing process, promotional programmers etc.). It covers
both outside and inner factors and communicates somewhat, what the
administration hopes to ha happen and incompletely what the
administration means to happen.
B. It is comprehensive: a budget is comprehensive which means that it
covers the activities and operations of all the segments or division of an
organization. Budgets are prepared for each segment or division of an
organization and all these are integrated into the master budget.
C. It provides a coordinate plane: the budgets are prepared for variable
segments or division of the organization after considering the conditions
and problems of each segment. It helps to bring coordination among the
sections and departments of an organization.
D. It is prepared in advance: a budget is prepared in advance and includes
the feature courses of actions. Thus, a budget is forward-looking in approach.
e.It is future arranged: a financial plan constantly identified with a predefined
identified with a period skyline. Thus, budgeted production, sales, profit etc.
are planned to be achieved in a predetermined time.
Importance/ objective of preparing the budget
The general objective of preparing a budget can be summarized as follows:
a. To plan the policy of a business for the next period for achievement of
the firm's objective and its transaction into monetary and quantitative terms.
B. To determine the responsibility of each department and executive so
they are made accountable for definite and precise results.
C. To coordinate the activities of a business so that each is a part of an
integral total.
D. To provide for continues comparison of actual and budgeted
performance in terms of results achieved and cost incurred so that cause of
any inefficiency is immediately detected and removed.
E. To control and direct each function so that best possible results may be
obtained.
F. To provide for the revision of budgets for futures in the light of experience
gained.
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