The following ppt discusses the concept of budget, its use and types

1. Budgetary control
Dr. N. Nandini
Assistant professor
Dept of commerce
Ethiraj College for Women

2. Meaning
• A budget is the monetary and/or quantitative
expression of business plans and policies to be
pursued in the future period of time.
• Budgeting is preparing budgets and other
procedures for planning, coordination and
control of business enterprise
• Budgetary control starts with budgeting and
ends with control

3. Features of a budget
• It is a financial statement with or without
monetary data
• It is prepared for a particular period
• It is prepared in advance
• It is a detailed plan of the policy to be pursued
• It is prepared to achieve a specific objective.

4. Budgetary control
• It is the process of preparation of budgets for
various activities
• It entails comparison of budgeted values with
actual values to identify deviations
• It helps in identifying deviations and eliminate
the same
• It helps in planning and coordination
• It acts as a method of control

5. Thus it can be stated
that budget is a means
and budgetary control is
the end result.

6. Objectives of budgetary control
• Plan and control the income and expenditure
• Determine the capital expenditure in advance
• Coordinate the activities of the business
• Ascertain responsibility
• Decentralize
• Prevent wastage, reduce expenses
• Plan and control expenditure
• Arrange for financing
• Communication

7. Advantages
• Planning
• Coordination
• Defining of objectives
• Brings in efficiency
• Maximisation of profit
• Focused approach

8. Advantages
• Availability of funds
• Identify deviations
• Facilitates delegation of authority
• Implementation of incentive systems
• Effective internal audit
• Installation of system of standard costing

9. Limitations
• Based on estimates
• Not suitable for small industries
• It requires cooperation from all the employees
• It is only a tool of management
• Static and rigid
• Installation of budgeting system is time
consuming

10. Classification of budgets

11. Functional Sales
Purchase
Production cost
Material
Purchase
Labour
Overhead
Research & Development
Capital expenditure
Cash budget
Master budget

12. Flexibility
Fixed
budget
Flexible
budget