Budget
refers to an estimated statement. It is prepared by companies as well as
government. It is for the purpose of attaining some goal.
Budget
can be defined as a financial and / or quantitative statement prepared and
approved prior to a defined period of time of the policy to be pursued during
that period for the purpose of attaining a given objective.
Followings are
the main objectives of budgeting-
A set of
targets/goals is often essential to lead and focus individual and group
actions. Planning not only motivates the employees but also improves overall
decision making.
Directing:
Business
is very complex and requires more formal direction and coordination. Once the
budgets are in place they can be used to direct and coordinate operations in
order to achieve the stated targets.
Controlling:
The
actual performance can be compared with the planned targets. This provides
prompt feedback about performance. budget also prevents unplanned adhoc
expenditure.
