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Advantages And Disadvantages Of Budgetary Control

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The word “budget” is derived from an old French word “bougette”, which means purse. It is defined as “the quantitative expression of a plan of action and an aid to the coordination and implementation of the plan. These days, budget is essentially used in almost every organization as an aid of measurements when setting the organization’s objectives and targets, and its use has allowed managers to bring about the objectives of the business in quantitative terms, usually on an annual basis, with a financial means of expression. Budgetary control is narrated as “a system of management control in which actual income and spending are compared with planned income and spending, so that you can see if plans are being followed and if those plans need to be changed in order to make a profit” and has in recent times played a greater role in performance management. At the same time, relationship between corporations and the capital market is on a rise, and has since resulted in many complications. This essay aims to identify and describe the merits of budgetary control, and at the same time, analysis the shortcomings in relation to the capital market.

An organization is a combination of many divisions covering a wide range of functions and activities. Budget helps to translate an organization’s strategic plan into operations by providing direction, coordination and communications, imparting more structure to an organization, and concurrently encourages employees to strive towards the

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