scroll to top
Stuck on your essay?
Get ideas from this essay and see how your work stacks up
Word Count: 3,299
BUDGETING A Budget is a plan expressed in financial terms CIMA defines a budget as A plan quantified in monetary terms prepared prior to a defined period of time to attain a given objective A budget is normally for a relatively short period eg 1 year Purposes of Budgeting A number of purposes of budgeting have been identified They include 1Planning 2Resource Allocation 3Co-ordination 4Control 5Communication 6Motivation 7Performance Evaluation Budgetary Control This is a system which uses budgets as a means of controlling the activities of the organisation It has three main aspects- 1Planning 2Co-ordination 3Control Planning Budgetary planning is the process of preparing detailed short-term plans for all the functions departments and activities of the organisation It is important that the short-term plans and objectives that make up the budget are related to the long-term plan and objectives of the organisation The budget may be drawn up by preparing an overall budget for the organisation which is then broken down into more detailed budgets for the different parts of the organisation the top-down approach or by devising budgets for the various parts of the organisation and then bringing them together to build up the overall budget the bottom up approach Extrapolations Forecasts and Plans In discussing budgetary planning it is important to distinguish between extrapolations forecasts and plans An extrapolation is the continued projection of an existing trend A forecast will be based on an extrapolation but is adjusted to take account of any known factors which will affect the trend A plan involves some intervention by the organisation in order to modify events in such a way as to make it more likely that the organisations objectives will be achieved Co-ordination It is vital that the plans of each department are related to each other and are integrated together to make a coherent whole eg it is no use planning for sales of 150000 units if productive capacity is restricted to
@Kibin is a lifesaver for my essay right now!!
- Sandra Slivka, student @ UC Berkeley
Wow, this is the best essay help I've ever received!
- Camvu Pham, student @ U of M
If I'd known about @Kibin in college, I would have gotten much more sleep
- Jen Soust, alumni @ UCLA