Importance And Importance Of Budget

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It is well recognized that budget are among the essential tools of management of any organization unlike other management aids, budgets are made use of practically by all functionaries in the organization. Budgets not only reflect the plan of action for different levels of management but are also useful to monitor various activates and initiate mid course corrective actions. Budgets just do not reduce the managerial function to a mere formula but aids as a managerial tool.
Hence”effective use” of this art as well science. Thus it needs continuous budget education and creation of evaluation and performance through budgets. Budgets provide management summarized picture of the results to be expected, also forms the proposed plan of operations. They enable the management to determine whether the plan is satisfactory. Budgets serve as a guide to executives and departmental heads. They measure performance since” Budget Deviations” reflect either the organization failure to achieve the planned standards of performance or its ability to better them.
Thus budgeting is a means of obtaining the most productive and profitable use of the companies’ resources through planning and control. Budgets are helpful in coordination the various activities (Such as production, sales, purchase etc) of the organization with the result that the activities precede according to the objective. Budgets are means of communication. Ideas of the top management are given the shape of the budget

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