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Budget and Budgeting Controls:

What is a budget?

A budget is referred to as a financial plan for a business which was prepared in advance. Budget is meant as two types - A budget may be set in monetary terms, For example a sales budget of £800,000 or it can be also expressed in terms of units, For instance a purchases budget of 8,000 units to buy.

Budgets can be of different types that are income budgets made for money received, like a sales budget, or expenditure budgets that are used for money spent, like a purchases budget.

Cash budget is a budget which combines both income and expenditure, in which estimates are made on what will happen to the bank balance during the time slot of the budget.

Mostly budgets are prepared for the next financial year and are divided into shorter time periods, as said four-weekly or monthly. This enables the higher authorities and they can easily exercise budgetary control over the budget. The actual results are taken and, matched with expected results and suitable actions are taken for discrepancies, if exists.

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Benefits of budgets and budgetary control:

Budgets will provide benefits for all that is for the business, and also for managers and other staff-

1. First major benefit is budget assists in planning for a business. Through this a business can ensures about its plans and actions.

2. The budget helps in communication and co-ordination in all the members of organization. All of them know about their own role and responsibilities.

3. The budget plays a key role in decision making. Because actual and expected results are matched to take active decisions.

4. An important reason to make budget is that it can be used to monitor and control all the aspects of the business.

5. The budget can be used to motivate staff members to achieve objectives of the business.

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Major Budget and Budgetary Controls assignment topics covered by our professional tutors:

  • Budget approval
  • Capital budget
  • Budgetary control
  • Departmental budget
  • Performance evaluation
  • Taking corrective actions

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