Importance of Budgets
1 INTRODUCTION A budget is a plan. Budgeting is generally formalized written documents. Budgeting is the process of developing a plan, implementing it and attempting to control outcomes so that they confirm to or exceed the result called for by the plan. Budgeting is an element of cost accounting, because mush of planning related to cost the organization expects to incur.
1.1 IMPORTANCE OF BUDGETS Budgeting is important process in organization. A budget process that works well could produce benefits as follow. * To pre-determine the capital expenditure of business. * To plan and control the income expenditure of organization. * To operate various divisions, units, department and cost center efficiently. * To ensure the availabity of adequate working capital. * To co-ordinate the activity of various division or department. * To fix divisional as well an individual responsibility. * To prevent waste to reduce expense and to obtain the desire income. * To obtain a more economical use of capital.
1.2 CONSEQUENCES OF NOT PREPARE BUDGETS * Fail of planning of actual operation. * Fail co-ordinate the activities of the organization. * Fail communicate plan to various responsibility center managers. * Fail motivate managers to strive to achieve the budgets goals. * Fail to control activities. * Fail evaluate the performance of managers.
1.3 TYPES OF BUDGETS Organization have many type of budgets these include long range or strategic budget, program budget, operation budget, Expenditure budget, revenue budgeting, project budgeting, capital budget, cash budget, and special purpose budgets.
1.4 BACKGROUND OF COMPANY “ABC” (the name has been changed due to commercial reasons) is a steel-making company that is a private limited company that operates in Pakistan from 1996 and supplies carbon steel parts to Original Equipment Manufacturers
1.1 IMPORTANCE OF BUDGETS Budgeting is important process in organization. A budget process that works well could produce benefits as follow. * To pre-determine the capital expenditure of business. * To plan and control the income expenditure of organization. * To operate various divisions, units, department and cost center efficiently. * To ensure the availabity of adequate working capital. * To co-ordinate the activity of various division or department. * To fix divisional as well an individual responsibility. * To prevent waste to reduce expense and to obtain the desire income. * To obtain a more economical use of capital.
1.2 CONSEQUENCES OF NOT PREPARE BUDGETS * Fail of planning of actual operation. * Fail co-ordinate the activities of the organization. * Fail communicate plan to various responsibility center managers. * Fail motivate managers to strive to achieve the budgets goals. * Fail to control activities. * Fail evaluate the performance of managers.
1.3 TYPES OF BUDGETS Organization have many type of budgets these include long range or strategic budget, program budget, operation budget, Expenditure budget, revenue budgeting, project budgeting, capital budget, cash budget, and special purpose budgets.
1.4 BACKGROUND OF COMPANY “ABC” (the name has been changed due to commercial reasons) is a steel-making company that is a private limited company that operates in Pakistan from 1996 and supplies carbon steel parts to Original Equipment Manufacturers