Cover Page

Name of the College: SIES College of Arts Science and Commerce

Topic : Introduction to budgeting and budgetary controls as a tool
For accountability in government matters
Group No : 21
Submitted By : Riya Yadav
Details of Group :
Number Name Roll No Contribution Mobile No

1 Harsh SC2223305 Introduction to 7045038395

Tandale
2 Joel Biju
3 Ashwin
Vanika
4 Riya Yadav SC2223308 Statement of the
5 Sairam
Gounder
6 SC2223310 Scope of the study
7 Rohit
Yadav
8 Jatin Puri
budgeting and how
does it work plus
diagram and pie chart
SC2223306 Objective of the study 8108249879
and diagrams and pie
chart
SC2223307 Significance of the 8828746931
study and diagram and
pie chart
9867651192
problem and diagrams
and pie chart
SC2223309 Hypothesis
formulation with
diagram and pie chart
with diagram and the
pie chart
SC2223311 Limitations of the 7738927836
study with diagram
and pie chart
SC2223312 Bibliography and 9372256954
conclusion of the topic
Index Page

1 Introduction to budgeting and budgetary controls

2 Objective of the study

3 Hypothesis Formulation

4 Significance of the study

5 Scope of the study

6 Limitations of the study

7 Conclusion

8 Bibliography

Introduction To Budgeting
A budget is defined as the formal expression of plans, goals, and objectives of management
that covers all aspects of operations for a designated time period. The budget is a tool
providing targets and direction.

Budgets provide control over the immediate environment, help to master the financial aspects
of the job and department, and solve problems before they occur. Budgets focus on the
importance of evaluating alternative actions before decisions actually are implemented.

A budget is a financial plan to control future operations and results. It is expressed in

numbers, such as dollars, units, pounds, hours, manpower, and so on. It is needed to operate
effectively and efficiently.

Budgeting, when used effectively, is a technique resulting in systematic, productive

management.

Budgeting facilitates control and communication and also provides motivation to employees.

Budgeting allocates funds to achieve desired outcomes. A budget may span any period of
time. It may be short term (one year or less, which is usually the case), intermediate term
(two to three years), or long term (three years or more).

Short-term budgets provide greater detail and specifics. Intermediate budgets examine the
projects the company currently is undertaking and start the programs necessary to achieve
long-term objectives.

Long-term plans are very broad and may be translated into short -term plans. The budget
period varies according to its objectives

How Budgets Work

Although the budgeting process for companies can become complex, at its most basic, a
budget compares a company's revenue with its expenses in a given period.

Of course, determining how much to spend on various expenses and projecting sales is only
one part of the process. Company executives also have to contend with a myriad of other
factors, including projecting capital expenditures, which are large purchases of fixed
assets such as machinery or a new factory.
They must also plan for their ongoing cash needs, revenue shortfalls, and the economic
backdrop.

Regardless of the type of business, the ability to gauge performance using budgets is critical
to a company's overall financial health.
Objective Of The Study
A government budget is a country’s year-long financial report explaining item-wise calculations of future
revenue and expenditure. The budget explains the income and expense of a nation.
In India, in the beginning of every year, the government presents its budget in front of the Lok Sabha,
explaining an estimated receipt and expense for the upcoming financial year.
The fiscal year starts from 1st April and concludes on 31st March of the next year.
The government prepares an expenditure according to its objectives and then starts gathering the resources
and funds to fulfil the proposed investment. The funds are collected from fees, taxes, interest on loans
given to states, fines, and dividends by public sector enterprises.

Reallocation of resources – It helps to distribute resources, keeping in view the social and
economic advantages of the country. The factors that influence the allocation of resources
are:

Allowance or Tax concessions – The government gives allowance and tax concessions to
manufacturers to encourage investment.

Direct production of goods and services – The government can take the production process
directly if the private sector does not show interest.

Minimise inequalities in income and wealth – In an economic system, income and wealth
inequality is an integral part. So, the government aims to bring equality by imposing a tax on
the elite class and spending extra on the well-being of the poor.
Economic stability – The budget is also utilised to avoid business fluctuations to accomplish
the aim of financial stability. Policies such as deficit budget during deflation and excess
budget during inflation assist in balancing the prices in the economy.

Manage public enterprises – Many public sector industries are built for the social welfare of
people. The budget is planned to deliver different provisions for operating such business and
imparting financial help.

Economic growth – A country’s economic growth is based on the rate of investments and
savings. Therefore, the budgetary plan focuses on preparing adequate resources for investing
in the public sector and raising the overall rate of investments and savings.

Decrease regional differences – It aims to diminish regional inequalities by implementing

taxation and expenditure policy and promoting the installation of production units in
underdeveloped regions.

Types of Budget
The budget is divided into three types.
Balanced budget – A government budget is assumed to be balanced if the expected
expenditure is similar to the anticipated receipts for a fiscal year.

Surplus budget – A budget is said to be surplus when the expected revenues surpass the
estimated expenditure for a particular business year. Here, the budget becomes surplus when
taxes imposed are higher than the expense.

Deficit budget- A budget is on deficit if the expenditure surpasses the revenue for a
designated year.

Elements of a Government Budget

The main elements of a budget are:

a. It determines government expenditure and receipts.

b. The budget is estimated for a fixed period, typically for a year.

c. Investment and sources of finance are prepared with the objectives of the government
d. All the budget needs to be passed by assembly or parliament before its implementation.

Hypothesis Formulation

A hypothesis (plural hypotheses) is a proposed explanation for a phenomenon. For a

hypothesis to be a scientific hypothesis, the scientific method requires that one can test it.
Scientists generally base scientific hypotheses on previous observations that cannot
satisfactorily be explained with the available scientific theories.

Even though the words “hypothesis” and “theory” are often used interchangeably, a scientific
hypothesis is not the same as a scientific theory.

A working hypothesis is a provisionally accepted hypothesis proposed for further research[1]

in a process beginning with an educated guess or thought.[2]A different meaning of the term
hypothesis is used in formal logic, to denote the antecedent of a proposition; thus in the
proposition "If P, then Q", P denotes the hypothesis (or antecedent); Q can be called a
consequent.

P is the assumption in a (possibly counterfactual) What If question. The adjective

hypothetical, meaning "having the nature of a hypothesis", or "being assumed to exist as an
immediate consequence of a hypothesis", can refer to any of these meanings of the term
"hypothesis".People refer to a trial solution to a problem as a hypothesis, often called an
“educated guess”[15][2] because it provides a suggested outcome based on the evidence.

However, some scientists reject the term “educated guess” as incorrect. Experimenters may
test and reject several hypotheses before solving the problem.

According to Schick and Vaughn,[16] researchers weighing up alternative hypotheses may

take into consideration:

Testability (compare falsifiability as discussed above)

Parsimony (as in the application of “Occam’s razor”, discouraging the postulation of

excessive numbers of entities)

Scope – the apparent application of the hypothesis to multiple cases of phenomena

Fruitfulness – the prospect that a hypothesis may explain further phenomena in the future

Conservatism – the degree of “fit” with existing recognized knowledge-systems.