Budgetary Control

For effective control on variations bussiness activity planning needs various information for decision making and execution of various activities. Every business needs resources which are always limited. Thus, out of limited resources, maximum use is recommended. For, these budgets are needed. The preparation and use of budget different business activities are controlled.

Budgets are financial statements prepared for definite future period on the basis of planned forecast figures. The budgets are prepared to make sure the availability of resources at a future date. The budgeted activities are compared with the actual results and variations are put for correction.

These are formal programmes, for the future and are expected results. Budgets are forward thinking and planning. In this chapter, an effort våll be made to explain the practical utility of various budgets.

Q. 1. Define Budget and Budgetary Control, What are its various objectives?

Answer Modern business is full of instability and uncertainties. On one hand, keen competition, Govt. policies, different laws, Govt. regulations and different New techniques of production and above all the changing consumer behavior, in such situation that businessman will get success, who can face these challenges. The impact of these has been that all businessmen …

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Q. 2. Discuss the budgetary control limitations.

Answer Limitations of Budgetary Control While the advantages of a budgetary technique are unquestionably impressive and for reading, certain limitations and pitfalls of budgeting need to be mentioned. 1. Budgeting control based on estimates Budgeting is not an exact science; a certain amount of estimate is present in all budgetary plans. A revision or modification …

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Q. 3. Explain in brief the various factors for budgetary control.

What are the main requirements of a good budgetary system or what are the steps for budget installation? Answer The following are the chief factors needed for budgetary control: 1. Objectives The first important requirement for the budget is the clear cut objective of the budget which needs well defined organizational system through which the …

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Q. 4. What are functional budgets? Which functional budgets are commonly used by the Management?

The budget satisfies different purposes. Thus different types of budgets are commonly used. The budget can be grouped as: 1. Time budget. Short period or long period budget. 2. Functional budget. Functional budgets Functional Budget is that budget which is associated with the functions of an organization. For examples: Sales budget, Production budget, Labor budget, …

Q. 4. What are functional budgets? Which functional budgets are commonly used by the Management? Read More »

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