The Objectives Of Budgeting

July 23rd, 2006 Comments off
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What Are The Objectives Of Budgeting?

    ·  Budget provides the yardstick against which future results can be compared;

    ·  With the establishment of the budget, action(s) can be taken by management if there are any material variances against budget;

   ·  Budgets enable management to plan and anticipate in areas of adequacy in working capital and scarce or type of availability of resources;

   · Budgets are able to direct capital expenditure in the most profitable direction;

   ·  Assist to plan and control earnings and expenditure so that maximum profitability can be achieved;

   ·  It act as a guide for management decisions when unforeseeable conditions affect the budget;

   ·  Assist in decentralizing responsibility on to each manager involved. With the setting of budgets, the managers involved will better understand what the company expects from them. Therefore there is a congruence of goals between the company and the employees

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