Budgetary Control
BUGETARY CONTROL
MEANING AND NEED FOR BUDGET A budget is prepared to have effective utilisation of funds and for the realisation of objectives as efficiently as possible. Budgeting is a powerful tool to the management for performing its functions efficiently.
The Chartered Institute of Management Accountants, ENGLAND defines budget as under, A plan quantified in monetary terms prepared and approved prior to a defined period of time usually showing planned income to be generated and or expenditure to be incurred during that period and the capital to be employed to attain a given objective.
Thus a budget fixes a target in terms of rupees or quantities against which the actual performance is measured. A budget can, therefore, be taken as document which is closely related to both the management function as well as the accounting function of an organisation.
BUDGETARY CONTROL
Budgetary control is applied to a system of management and accounting control by which all operations and output are forecasted as far ahead as possible and actual results when known are compared with budget estimates.CIMA,Londen defines budgetary control as-The establishment of the budgets relating to the responsibilities of executives to the requirements of a policy and the continuous comparison of actual with budgeted result either to secure by individual action the objectives of that policy or to provide a firm basis for its revision.
OBJECTIVES OF BUDGETARY CONTROL
It is planned to assist the management in the allocation of responsibilities and authority to aid in making estimates and plans for future, to assist in analysis of variations between estimated and actual results and to develop basis of measurements or standards with which to evaluate the efficiency of operations. The general objectives of budgetary control are as follows:
1. Planning: A budget is a plan of
MEANING AND NEED FOR BUDGET A budget is prepared to have effective utilisation of funds and for the realisation of objectives as efficiently as possible. Budgeting is a powerful tool to the management for performing its functions efficiently.
The Chartered Institute of Management Accountants, ENGLAND defines budget as under, A plan quantified in monetary terms prepared and approved prior to a defined period of time usually showing planned income to be generated and or expenditure to be incurred during that period and the capital to be employed to attain a given objective.
Thus a budget fixes a target in terms of rupees or quantities against which the actual performance is measured. A budget can, therefore, be taken as document which is closely related to both the management function as well as the accounting function of an organisation.
BUDGETARY CONTROL
Budgetary control is applied to a system of management and accounting control by which all operations and output are forecasted as far ahead as possible and actual results when known are compared with budget estimates.CIMA,Londen defines budgetary control as-The establishment of the budgets relating to the responsibilities of executives to the requirements of a policy and the continuous comparison of actual with budgeted result either to secure by individual action the objectives of that policy or to provide a firm basis for its revision.
OBJECTIVES OF BUDGETARY CONTROL
It is planned to assist the management in the allocation of responsibilities and authority to aid in making estimates and plans for future, to assist in analysis of variations between estimated and actual results and to develop basis of measurements or standards with which to evaluate the efficiency of operations. The general objectives of budgetary control are as follows:
1. Planning: A budget is a plan of