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A budget is a financial and quantitative statement of an operational plan  Email

related to a specific time period, which is to be followed during the
budgeted period in order to achieve specific financial objectives of an Subscribe Now

organization. We don't spam. We Educate.

According to I.C.W.A, “A budget is a financial and/or quantitative

statement prepared prior to a defined period of time, of the policy to be CHOOSE YOUR SUBJECT
pursued during that period for the purpose of attaining a given
objective.” Advertising Management (20)
Articles (240)
Features of a Budget Banking and Insurance (10)
 It is a financial and quantitative statement of a plan of action Blog (35)
It is always expressed in terms of money and/or quantity Business & Entrepreneurship (6)
Business Communication (15)
Business Environment (21)
Business Ethics (2)
Go beyond APM Business Law (1)
Business Statistics (49)
Company Law (14)
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Computer Applications (9)
Consumer Behaviour (22)
Cost Accounting (3)
E-commerce (8)
Dynatrace Sign Up Entrepreneurship (11)
Financial Accounting (2)
It is prepared prior to the implementation of the operational plan Financial Management (23)
It is based on pre-determined management policy Financial Services (19)
It is prepared to achieve specific financial objectives Human Resource Management (18)

It indicates the costs and revenues, capital to be employed, incremental Income Tax (2)

effects on former budgets etc. International Business (13)

Investment Analysis & Portfolio Management
(10)
Budgeting
IT & Technical Skills (5)
Macro-Economics (9)
Budgeting refers to the process of preparation, implementation and
Management Accounting (6)
operation of budgets. It involves formulation of operational plans for a
Management Information System (4)
given future period and expressing it in monetary terms. Managerial Economics (2)
Marketing & Advertising (7)
Types of Budget Marketing Management (18)
Marketing of Services (6)
Micro-Economics (2)
 Operations Management (2)
Organizational Behaviour (7)
Personal Finance (2)
Principles of Management (9)
Project Management (11)
Projects and Presentations (33)
Public Finance (11)
Research Methodology (9)
Rural Marketing (1)
Strategic Management (14)

On the Basis of Time

RECENT POSTS

Long Term Budget – Budget prepared for a period of 5 to 10 years.

Investment Analysis – Introduction,
Short Term Budget – Budget prepared for a period of 1 to 2 years. Objectives, Process
May 5, 2018

Social Exchange, Equity & Balance Theory,

Interpersonal competence
April 16, 2018

IRDAI – Insurance Regulatory Development

and Authority of India
April 1, 2018

Learning Theories – Cognitive,

Conditioning, Social Learning Theories
March 31, 2018

Current Budget – Budget prepared for a period of less than 6 months.

Leadership Styles – Types of Leadership
Styles
On the Basis of Activity March 27, 2018
 Inventory, Inventory Control – Theory Notes
Fixed Budget – Budget that is fixed for a given level of activity or time
January 13, 2018
period and does not change with changing business situations.
Flexible Budget – Budget that is flexible and can be revised from time
Organization Design – Types of
to time according to the changing business needs and situations.
Organization Structure
January 2, 2018
On the Basis of Nature of transaction
Marketing Information System –
Components, Importance
Capital Budget– Budget prepared for the capital expenditures of a
December 20, 2017
business.
Operating Budget – Budget prepared to meet the day to day expenses Resistance to change – Levels, Overcoming
of a business. Resistance
December 18, 2017

On the Basis of Functions Decision Making – Types, Process,

Techniques, Importance
Master Budget – Various functional budgets are integrated together to December 18, 2017

form a master budget.

Financial Budgets – Budgets related to various costs and revenues of

the organization.

Cash Budget
Working Capital Budget
Capital Expenditure Budget
Income Statement
Budgeted Balance Sheet
Retained Earnings

Operational Budgets – Budgets prepared for different activities or

operations of the organization.
 Sales Budget
Production Budget
Purchase Budget
Materials Budget
Personnel Budget
Plant Utilization Budget
Marketing Budget
Administrative & Selling expenses budget
Manufacturing Expenses budget

Budgetary Control 

Budgetary Control is the process of determining various budgeted figures

for an organization for the future period and then comparing the budgeted
figures with actual figures for calculating deviations and taking remedial
measures to minimize deviations. It is a continuous process that helps in
planning and controlling costs.

According to Howard and Brown, “Budgetary control is a system of

controlling costs which includes preparation of budgets, coordination of
departments, comparison of actual performance with budgeted
performance and acting upon the results to achieve maximum
profitability.”

Requirements of a Good Budgetary System

Budgeting process must be backed by the Chief Executive of an

organization
 Organizational goals must be clearly stated and quantified and further
divided into functional goals
People responsible for execution of budget must be involved in its
preparation
Budgets must be realistic, continuous and must cover all relevant
aspects
Budgeting system must be based on information, communication and
participation
Clear responsibilities for effective budget implementation must be
established

Essentials of Budgetary Control

(1)Organization Structure
(2) Budget Centers – It may be a department or a group of people in a
department, who are responsible for preparation of a budget.

(3) Budget Manual – It is a written document containing rules, regulation,

policies and guidelines for preparing budgets.

(4) Budget Officer (Coordinator) – The person responsible for

scrutinizing, evaluating and finalizing the budgets prepared by different
functional heads.

(5) Budget period – Time period for which budget is prepared.

(6) Budget Committee – Group of people responsible for preparation

and execution of budgets
 Go beyond APM

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(7) Determining Key Factor – Principle factor that influences all budgets

Steps in Budgetary Control System

Advantages of Budgetary control

Effective budgetary control leads to maximization of profit

It facilitates coordination between different functional departments
It acts as a tool for measuring (financial and operational) performance
It helps in eliminating wastages and taking corrective actions
It helps in reducing costs
It helps to take decisions regarding performance appraisal of
employees

Also Read:
 Zero Based Budgeting
Performance Budgeting
Responsibility Accounting

BY: BBAMANTRA / IN: ARTICLES, COST ACCOUNTING, FINANCIAL MANAGEMENT, MANAGEMENT ACCOUNTING /
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