Business Budgets

 

Meaning

A budget is a financial and/or quantitative statement,  prepared and approved prior to a defined period of time, of the policy to be pursued during that period for the purpose of attaining objectives. It may include income, expenditure and employment of capital

 

A budget is a blue print of the projected plan of action expressed in quantitative terms for a specified period of time and the process of preparing a budget is called budgeting. Budgetary control refers to the principles, procedures and practices of achieving given objectives through budgets.

 

Definition

 

” A financial and/or quantitative statement, prepared and approved prior to define period of time, of the policy to be perused during that period for the purpose of attaining a given objective.”

 

The difference between budget, budgeting, and budgetary control has been stated thus:

.Budgets are the individual objectives of a department etc., whereas budgeting may be said to be the act of building budgets. Budgetary control embraces all this and in addition includes the science of planning the budgets themselves and the utilization of such budgets to effect an overall management tool for the business planning and control..

 

The essentials of a budget are.

1. It is prepared in advance and is based on future plan of actions;

2. It relates to a future period and is based on objectives to be attained;

3. It is a statement expressed in monetary and/or physical units prepared for the implementation of policy formulated by the management.

Budget is a financial plan/, budgeting is the art of planning and budgetary control is the art of adhering to the plan. Whatever programmes and policies are chalked out by the management, budgets put them in a concrete form. The follow-up action to see that the plans are adhered to complete the system of budgetary control. Adherence to plan means that effort is made to contain the actual costs within targeted limits. Thus a system of budgetary control secures control over costs and performances in different segments of business.

 

 

 

 

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