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What Are The Objectives Of Budgeting? |
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· Budget provides the yardstick against which future results can be compared; |
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· With the establishment of the budget, action(s) can be taken by management if there are any material variances against budget; |
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· Budgets enable management to plan and anticipate in areas of adequacy in working capital and scarce or type of availability of resources; |
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· Budgets are able to direct capital expenditure in the most profitable direction; |
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· Assist to plan and control earnings and expenditure so that maximum profitability can be achieved; |
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· It act as a guide for management decisions when unforeseeable conditions affect the budget; |
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· 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 {Click here to go to all other articles on budgets and budgetary control} |