Accounting

Topics: Management, Budget, Planning Pages: 3 (705 words) Published: July 29, 2013
Managerial Accounting

ASSIGNMENT 1

I agree that budgetary control is part of overall organisation control and is concerned primarily with the control of performance. Also, the use of budgetary control in performance management has of late taken on greater importance especially as a more integrative control mechanism for the organisation.

A budget is defined as an estimate of costs, revenues, and resources over a specified period, reflecting a reading of future financial conditions and goals. Being as one of the most important administrative tools, a budget serves as a plan of action for achieving measured goals, standard for measuring performance and device for coping with probable adverse situations. In short, it is a blue print of projected plan of an action of a business for a definite period of time.

A budget is prepared to have effective utilization of funds and for the realization of objective as efficiently as possible. Budgeting is a powerful tool to the management for performing its functions, such as formulation plans, coordination activities and controlling operations efficiently. Budget and budgetary control provide a set of basic techniques for planning and control. According to Institute of Charted Management Accountants, England “ A plan quantified in monetary term prepared and approved prior to a defined period of time usually showing planned income to be generated and to be incurred during that period and the capital to be employed to attain a given objective.”

Organisational control is the process of establishing and maintaining authority over and throughout an enterprise. The organisational control process within a larger business typically requires the use of systems that assist a manager in analysing considerable amounts of data about how the business and its employees are functioning in order to make appropriate administrative decisions.

No system of planning can be successful without having an effective and efficient...
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