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Budgetary Control Notes & Study Materials

State the various methods of preparing sales budget. Define Budgetary control and state its advantages 2. A budget is a communication tool.

What is a Master Budget? Similar scenarios exit with merchandising and manufacturing companies. Operating budget is related to different activities of concern.


When budget is prepared for business activity covering a period of more than one year, it is called long term budget. This will help in achieving result.

On budgeting and budgetary control notes pdf download basis of period, or time covered in budget, it is grouped into short term and long term budget. This signifies that budgetary control is a system that encompasses the complete process starting from the preparation of the budget or the action plan, covering monitoring and review culminating in counteractive action. This comparison reveals the necessary actions to be taken so that organizational objectives are accomplished.

Budget operation is expensive and need expert team as well as there is incidental expenditure. Other experts described it as a continuous process which reviews and adjusts budgetary targets during the financial year and produces a control mechanism to hold budget holder to account. Control comes through variance analysis and reporting. What is Budgeting and budgetary control notes pdf download Budgeting? It is most powerful device to management for performance evaluation Bhattacharyya, Flexible budget include series of budgets prepared in respect of different levels of activity during a budget period.

It facilitates management by budgeting and budgetary control notes pdf download by stressing on those operations which drive from budgeted standards in a significant way. This is classified into cash and capital expenditure budget. Preparation of budget may be required by organization for the purpose of its flexibility of production or its functions involved or for the purpose of its period covered.

The tool is as good as its applier. It is a broad plan of action intended to accomplish the policy objectives set by the government for the coming year. Many persons, corporations and governments plan their financial actions by preparing budgets.

This does not mean management ignores difference in sales level, or customers eating in a restaurant, because those differences and the management actions that caused them need to be evaluated, too.

Budget and Budgetary Control

It allows each manager to presume responsibility which is clearly established. Government organize master budget which is supported by budget classification as revenue, capital expenditure and cash budget. When comparing Budget and Budgetary Control, it can be demonstrated vudgeting budget is quantitative plan of action for future period. It must assess its income and expenditures using historical data of activities in nootes past and predict future trends.

Batty explained that the entire process of preparing the budget is known as budgeting. In this doownload, budget is classified into three parts that include fixed, flexible and current budget.

This budget includes sales budget, production budget, cost budget, cash budget, projected income statement, and budgetar balance sheet Bhattacharyya, When making a personal budget, an individual will normally assign the appropriate amount of money to fixed expenses such as rent, car payments, or utility bills, and then make an educated estimation for how much money they will spend in other categories, such as groceries, clothing, or entertainment.

Budgeting helps in optimum utilization of resources by allocating them according to the requirements of different departments. This budget has three categories that include production, cost and sales budget. While any plan need not be a budget, a budget nots to be necessarily a plan.

Current budget is associated with current business activities of a concern and budgeting and budgetary control notes pdf download prepared under current condition for a very short period.

The potency or flaw of the budgetary control system depends to a large extent on the precision with which budgeting and budgetary control notes pdf download are made. The budget targets are traditionally evolved not by agreement but from top to bottom.

If a budget is prepared assuming customers will be served, how will the managers be evaluated if customers are served?

Budgetary control is a method to control costs which includes the preparation of budgets. It clearly defines the area of responsibility for all concerned executives who are engaged in various downlod activities. A budget can be made budgeting and budgetary control notes pdf download budgtary person, family, and group of people, business, government, country, multinational organization or for any thing that makes and spends money.

In universal terms, a budget is an assessment of the income and expenses over a specified budgeting and budgetary control notes pdf download period of time. Budgeting focuses on specific and time bound targets and thus help in the attainment of organizational objectives. Although budget is essential part of Budgetary Control system, both are interrelated and dependent on each other Bhattacharyya, Other objective is to effectively communicate: When budget is prepared for business activity covering a period of one year or less, it is termed budgeting and budgetary control notes pdf download short term budget such as for sales, cash.

Next is to coordinate: It may include income, expenditure and employment of capital. Therefore the term budgeting refers to the act of preparing budget Bhattacharyya, It generally culminates in a cash budget, a budgeted income statement and a budgeted balance sheet.

Budget will not stand the test of time if not flexible because of the dynamic and constant change in business condition. The approved budget represents the details of planned activities which assist in conttol the plans.

Budgeting is also used for achieving coordination among different departments of an organization and highlights the interdependence between them. Budget is generally categorized on the basis of the need of respective organization. Classification of budgetingg on the basis of period: It makes management to become more cost conscious and reduce waste and inefficiency in its operations.