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PREPARATION/TYPES OF BUDGETS

PREPARATION/TYPES OF BUDGETS It may be recalled that a budget with reference to planning and control refers to a comprehensive and coordinated budget generally known as master budget. In operational terms, a comprehensive or overall budget has several components. A...

BUDGETS-PURPOSE

BUDGETS-PURPOSE As a tool, budgets serve as a guide to the conduct of operations and a basis for evaluating actual results. The main objectives of budgeting are: (i) Explicit statement of expectations, (ii) Communication, (iii) Coordination, and (iv) Expectations as a...

COORDINATION

COORDINATION Budgets are prepared for the different components /segments/divisions/facets/activities of an organisation so as to take care of the situations and problems of each component. The budget for each of the components are prepared in harmony with each...

COMPREHENSIVENESS

COMPREHENSIVENESS A budget is comprehensive in that all the activities and operations of an organisation are included in it. It covers the organisation as a whole and not only some segments. The modus operandi is that budgets are prepared for each...

Specified Future Period

Specified Future Period A budget relates to a specified period of time, usually one year. If it is not related to a time horizon, it will be meaningless. Planning merely for a given amount of, say, sales/profits will not constitute a budget unless a time dimension is...

FINANCIAL TERMS

FINANCIAL TERMS Budgets are prepared in financial terms, that is, in terms of monetary value such as the rupee dollar, and so on. The reason is that the monetary unit is a common denominator. The various activities and operations arc expressed in different units, for...