[GO TO THE MAIN PAGE ON ALL ARTICLES ON BUDGETING]
Before, the managers can embark on the preparation of budget, they should at least understand what are the purpose(s) or objectives(s) of budgeting.
In this Part 1, tabulate below some of the main objectives of budgeting:-
|
The Objectives Of Budgeting are as follows:-
|
- 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
|
No related posts.
Related posts brought to you by Yet Another Related Posts Plugin.
