budget & budgetary control-objectives-types.pptx

The following ppt discusses the concept of budget, its use and types

1. Budgetary control Dr. N. Nandini Assistant professor D ept of commerce Ethiraj College for Women

2. Meaning A budget is the monetary and/or quantitative expression of business plans and policies to be pursued in the future period of time. Budgeting is preparing budgets and other procedures for planning, coordination and control of business enterprise Budgetary control starts with budgeting and ends with control

3. Features of a budget It is a financial statement with or without monetary data It is prepared for a particular period It is prepared in advance It is a detailed plan of the policy to be pursued It is prepared to achieve a specific objective.

4. Budgetary control It is the process of preparation of budgets for various activities It entails comparison of budgeted values with actual values to identify deviations It helps in identifying deviations and eliminate the same It helps in planning and coordination It acts as a method of control

5. Thus it can be stated that budget is a means and budgetary control is the end result.

6. Objectives of budgetary control Plan and control the income and expenditure Determine the capital expenditure in advance Coordinate the activities of the business Ascertain responsibility Decentralize Prevent wastage, reduce expenses Plan and control expenditure Arrange for financing Communication

7. Advantages Planning Coordination Defining of objectives Brings in efficiency Maximisation of profit Focused approach

8. Advantages Availability of funds Identify deviations Facilitates delegation of authority Implementation of incentive systems Effective internal audit Installation of system of standard costing

9. Limitations Based on estimates Not suitable for small industries It requires cooperation from all the employees It is only a tool of management Static and rigid Installation of budgeting system is time consuming

10. Classification of budgets