The Basic Framework of Budgeting

A budget is a detailed quantitative plan for acquiring and using financial and other resources over a specified forthcoming time period.

► The act of preparing a budget is called budgeting.
► The use of budgets to control an organization’s activity is known as budgetary control.

Advantages of Budgeting:-

1. Define goal and objectives
2. Think about and plan for the future
3. Means of allocating resources
4. Uncover potential bottlenecks
5. Coordinate activities
6. Communicate plans

Human Factors in Budgeting:

► The success of budgeting depends upon three important factors:
► Top management must be enthusiastic and committed to the budget process.
► Top management must not use the budget to pressure employees or blame them when something goes wrong.
► Highly achievable budget targets are usually preferred when managers are rewarded based on meeting budget targets.