Presented by: Amjad Jaleel Anaz K. Bava Anoop v.G

8/14/2019 Presented by: Amjad Jaleel Anaz K. Bava Anoop v.G

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Presentedby:Amjad Jaleel

Anaz K. Bava

Anoop V.G


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Definition By ICMA

A financial and/or quantitative statement,

prepared and approved prior to a definedperiod of time, of the policy to be pursued

during that period for attaining a given

objective


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Objectives Of Budgeting

To formulate a plan of action.

depends on the policy that the business

decide to execute.

To facilitate central control.

implementation of the policy and achieving

the target.

Helps in cost control.

control of cost through comparison.


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Objectives Cont

To centralise the control system.

Fixation of responsibility of various

executives in the organisation.


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Characteristics Of Good Budgeting

Should involve persons at different level while

preparing the budget.

Authority and responsibility should be properly

fixed.

Should get the whole hearted co-operation of

the top management.

The target should be realistic. A good system of accounting is essential.


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Characteristics Cont

Employees should be imparted budget

education.

A proper reporting system should be

introduced.


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Difference Between Budget And

Forecasti. Budgets are based on planning,

while forecast is seldom based onplanning.

ii. Budget is usually prepared for poneaccounting year,while forecasting may be for a very short

period like a day, certain hours etc or fora long period like years.

iii. In budget the results or estimates aredetermined in a scientific mannerconsidering various factors involved


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Difference Cont

while forecasting result is not one whichis tried to attain or desired to have.

iv. In budgeting the estimate is often

compared with actual in order to ascertainthe achievement or weakness,while there is no meaning in

comparing a forecast with the actualresult.

v. Budget is a tool of control, whileforecasting does not represent any tool ofcontrol.


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Difference Cont

iv. Budget is connected with business or

industry,

while forecasting is not.


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Budgetary Control

Budgetary control is the processof determining various budgeted figures andcomparing them with the actual performance

for calculating variances if any. Comparisonof budgeted and actual figures will enablethe management to find out discrepanciesand take remedial measures at proper time.

.


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Budgetary control involves the

following

i. Establishment of budgets for eachfunction of the organization.

ii. Comparison of the actual performance

with the budgeted results.iii. Taking steps to achieve the desired

objective.

iv. If the budgeted results is unattainable orunder cicumstances, the budget may berevised.


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Objectives of Budgetary Control

To ensure planning for future by setting

up various budgets.

To co-ordinate the activities of various

departments.

To operate various cost centres and

departments with efficiency and economy.

To take corrective measures either on the

budget side or on the performance side.


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Requisites Of Budgetary Control

a) A clearly defined organisation.

b) A well defined policy.

c) Proper delegation of authority andresponsibility.

d) Effective communication.

e) Budget education.f) Logical sequence in budget preparation.


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Cont

g) Participation of all employees.

h) Flexibility.

i) Motivation.


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Cont

Production budget.

Purchase budget.

Administration cost budget.

Capital expenditure budget.

Research and development cost budget.

Cash budget etc.


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Master Budget

Defined as a summary of the budget scheduled incapsule form made for the purpose of presenting in onereport, the highlights of budget forecast.

Also known as Summary budget or the Finalized budget

plan. Prepared for the business as a whole, combining all the

budget of a period into it.

Gives overall budget plan.


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Advantages

Summary of the whole budget available in one

report.

Checks the accuracy of all functional budget.

Gives estimated profit position of the concern

for the budget period.

Gives the projected balance sheet of the

organization.


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Cash Budget

Defined as An analysis of flow of cash in a

business for a future, short or long period of

time.

Forecast of expected cash intake and outlay.

Also known as financial budget.

Helps in effective utilization of available funds.


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Advantages

expected total receipts and total payment ofcash are available in one statement.

unsual item of expenditure like major capital

investments may be planned on the basis ofexpected availability of cash on future date.

funds from external sources can bearranged, if shortage is anticipated in

advance.


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Advantages Cont

all other functional budgets can be

conveniently adjusted.


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Documents

Presented by: Amjad Jaleel Anaz K. Bava Anoop v.G