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INTRODUCTION:-
A budget is a written plan covering projected activities of a firm for a definite period of time. It is a
monetary & quantitative expression of business plans & policies to be pursued in the future period of time. A
budget is prepared to have effective utilization of funds & for the realization of objective as efficiently as
possible.
Q. GIVE THE MEANING AND DEFINITION OF THE TERM BUDGETARY CONTROL. ( 2 Marks)
Budgetary control is the process of preparation of budgets for various activities & comparing the budgets
figures for arriving at deviations if any, which are to be eliminated in future. Thus budget is a means &
budgetary control is the end result. Budgetary control is a continuous process which helps in planning &
coordination. It also provides a method of control.
Definition
I.C.M.A. defines budgetary control as “the establishment of budgets, relating the responsibilities of
executives to the requirements of a policy, & the continuous comparison of actual with budgets results either to
secure by individual action the objectives of that policy or to provide a basis for its revision”.
Q. EXPLAIN THE OBJECTIVE OF BUDGETARY CONTROL.
1
a) To define the goal of the enterprise.
b) To provide long & short period plan for attaining these goals.
c) To co-ordinate the activities of different departments.
d) To operate various cost centres & department with efficiency & economy.
e) To eliminate waste & increase the profitability.
f) To estimate capital expenditure requirements of the future.
g) To centralize the control system.
h) To correct deviations from established standards.
i) To fix the responsibility of various individuals in the organization.
j) To ensure that adequate working capital is available for the efficient operation of the business.
k) To indicate to the management as to where action is needed to solve problems without delay.