Benefits of Budgeting

Wednesday, March 9, 2011

The budget period should be short enough to make reasonably accurate predictions and long enough to identify policies, strategies and procedures. It is essential that budget period and accounting period must be the same so that comparison between budgeted figures and actual performance can be made. Preparation of budget is the final step in the process of planning. Budget is an estimate of capital, revenue receipts and expenditures. In the words of H. Koontz, a budget is,”a statement of expected results expressed in numerical forms”. Hence, it can be called as’ Numberised programme’. They constitute an important device for control. They enable the management to regulate the financial transactions. They serve as a blue print for the attainment of the objectives. They are highly useful in decision-making. They enable the enterprise to attain desired volume of sales and profit.