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Budgets And Budgetary Control
SUBMITTED BY: VARUN ARORA GAURAV KUMAR

5/1/12

CONTENTS
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CONCEPT OF BUDGET WHY BUDGETS ARE PREPARED? DEFINITION OF BUDGETS KINDS OF BUDGETS MEANING OF BUDGETARY CONTROL DEFINITION OF BUDGETARY CONTROL STEPS INVOLVED IN BUDGETARY CONTROL ORIGIN OF Z.B.B. CONCEPT OF Z.B.B. OF Z.B.B.

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CONCEPT OF BUDGET
Everyone is familiar with the idea of a budget because it is essential in every walk of our life –national,domestic and business. A budget is a single use plan since it is prepared for a particular period of time.

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WHY BUDGETS ARE PREPARED?
A budget is prepared to have effective utilisation of funds and for the realisation of objective as effeciently as possible . Budgeting is a powerful tool of the management for performing its functions efficiently like formulating plans , cocoordinating activities and controlling operations.

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DEFINITION OF BUDGETS
ACCORDING TO ICMA TERMINOLOGY ,LONDON “A plan quantified in monetary terms prepared and approved prior to a defined period of time usually showing planned income to be generatd and expenditure to be incurred during that period and the capital to be employed to attain a given objective”

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Kinds of budgets
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On the basis of coverage On the basis of capacity On the basis of condition On the basis of period

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ON THE BASIS OF COVERAGE
1.FUNCTIONAL BUDGET 2.MASTER BUDGET

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ON THE CAPACITY
1.FIXED BUDGET 2.FLEXIBLE BUDGET

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ON THE BASIS OF CONDITION
1. 2.

BASIC BUDGET CURRENT BUDGET

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ON THE BASIS OF PERIOD
1.

LONG TERM BUDGET

2. SHORT TERM BUDGET

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MEANING OF BUDGETORY CONTROL
Budgetary control is a system of planning and controlling the cost with the help of budgets. Budgetary control is used to ensure that actual results do not deviate from the planned course more than necessary.

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DEFINITION ON BUDGETARY CONTROL
According to F.H Rowland

and W.H

Barr
Budgetary control is a “Tool of management used to plan ,carry out and control the operations of the business”

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STEPS IN BUDGETARY CONTROL
       

Determination of objective. Organisational chart. Establishment of budget centres. Location of the key factor. Providing adequate accounting records. Effective communication system. Appointment of budget controller Appointment of budgeted committee of budget manual

 5/1/12 Preparation

ORIGIN OF ZERO BASED BUDGETING

Zero based budgeting is a new technique of budgeting introduced first in U.S.A in a year 1969 this system of budgeting was developed by PETER PYHRR OF TAXES INSTRUMENT OF U.S.A and later on introduced by ex-president JIMMY KARTER OF U.S.A .

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CONCEPT OF ZBB
In the ZBB every year is taken as a new year and there is no need to take previous years figure as a base. In this type of budgeting budgets are prepared taking current year as zero base and current year performances are evaluated independently from previous year. Z.B.B refers to a ‘nil budget’ as the starting budget.

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STEPS INVOLVED IN Z.B.B
1. Identify each function and activity of organisation.This step is known as decision packing. 2. Evaluate each decision packing. 3. Compare each activity with possible alternatives. 4. Ranking of activities.

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ADVANTAGES OF Z.B.B.

ENSURES MORE CAREFUL PLANNING BEFORE PREPARATION OF BUDGET NOT BASED UPON INCREMNENTAL APPROACH HELPFUL IN EVALUATING PERFORMANCE OF NON-MANUFACTURING DEPTT. IMPROVES CO-ORDINATION IMPROVES COMMUNICATION CHANNEL

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IMPORTANT TOOL TO EVALUATE PERFORMANCE OF GOVT. DEPTT. 5/1/12

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