What Are The Advantages And Disadvantages Of Planning Tools Used For Budgetary Control

1208 Words5 Pages
P4. Explain the advantages and disadvantages of different types of planning tools used for budgetary control. Planning Tools used in management accounting Planning Tools are components that helps monitor organizational accomplishment stages related to implementation of an initiative, program, or intervention. There are plenty of planning tools used in management accounting which helps management for providing best information. The planning tools used in management accounting are include: pricing strategies, budgets, common costing system and strategic planning. Budget A budget is a financial statement which is an estimate of income and expenditure of a set period of time, which may include planned revenues, expenses, assets, liabilities and cash flows (Drury, 2015). The main purpose and benefit of using a budget is to achieving the financial and operational goals of the organisation. An appropriate business budget can assist the organisation chart its financial future and make strategic operating decisions. Budgetary Control Budgetary control is a management control system which based on feedback- in this system actual income and spending are compared with the planned income and spending. When there is a significant difference between the budget and actual spending the source is examined and then control action is taken, where applicable. Which is called variance analysis. Budgetary control has to turn out to controlling costs and maximizing profits in the organization.

More about What Are The Advantages And Disadvantages Of Planning Tools Used For Budgetary Control

Open Document