Skip to main content

Unit IV - Budget


Meaning and Need for Budget:

A budget is a blueprint of the plan of action to be followed during a specified period of time for the purpose of attaining a given objective.
According to CIMA Terminology, budget is “a plan quantified in monetary terms prepared and approved prior to a defined period of time, usually showing planned income to be generated and/or expenditure to be incurred during that period and the capital to be employed to attain a given objective”.

Features:

An analysis of the above definition reveals the following essential features of a budget:
(i) It is prepared beforehand based on a future plan of actions;
(ii) It is related to a definite future period and is based on the objectives to be attained;
(iii) It is expressed in financial terms;
(iv) It shows planned income to be generated;
(v) It shows probable expenditure to be incurred;
(vi) It indicates the capital to be employed during the period;
Thus, a budget sets the firm’s goals in clear formal terms to avoid confusion and provides a detailed plan of action for achieving the goals. It is a means of communication by which the top management uses the budget as a vehicle to communicate their ideas to the subordinates who are to give them the practical shape.
It coordinates the various activities (such as sales, production, purchases etc.) of the organization in such a way that the use of resources is maximized. It also provides a means of measuring and controlling the performance of the organization, and supplies information to the management, on the basis of which necessary corrective actions may be taken.

Types of budget:-

1. Sales Statement:

It includes a forecast of total sales during a period expressed in money and/or quantities in the organization. The forecast relates to the total volume of sales and also its break-up product-wise and area-wise in the organization. The responsibilities for making the sales budget lies with the sales manager in the organization.

2. Cash Budget 2:

In the organization, the cash budget usually gives detailed estimates of (a) cash receipts and (b) cash disbursements for the budget period. In the organization, it is prepared (i) to ensure that cash is available in time for meeting the financial commitments and (ii) to use cash available in the best possible manner.

3. Production Budget:

It includes a forecast of the output during a particular period analyzed according to (a) products, (b) manufacturing departments, to schedule its production according to sales forecast in the organization.

4. Flexible budget:

A flexible budget is a budget that adjusts or flexes with changes in volume or activity. The flexible budget is more sophisticated and useful than a static budget. (The static budget amounts do not change. They remain unchanged from the amounts established at the time that the the static budget was prepared and approved.

Video Lecture Links:
https://youtu.be/2LKHzjgncNk


Contents   1   2   3   4   5
Labels:

Comments

Post a Comment

Popular posts from this blog

e-Commerce - II - Index

Table of Contents Unit I: Internet-commerce Business Models: Social media model, advertising model, retail model, hybrid model, merchant model, informational model, drop-shipping model and revenue model. Unit II: B2C InternetMarketing Meaning of online marketing or internet marketing, online marketing strategies, marketing channels, internet branding, online publishing and advertising. Unit III: B2B OnlineMarketing Use of internet-based electronic data interchange (EDI), Benefits of online marketing in B2B e-commerce, procurement reengineering, just in time delivery, online marketing issues. Unit IV: E-governance: Meaning of e-governance and e-government, Objectives of E-governance, Private sector interface in E-Governance, Concepts of government to Business (G2B), Business to Government (B2G), Citizen to Government (C2G) Unit V: E-GovernanceModels Application of Internet EDI in E-governance, E-governance in India, E-Governance Models, Comparative Analysis M...
Post a Comment
Read more

Poem 1 - On His Blindness - by John Milton (Sem IV)

John Milton ’s poem “On His Blindness” is an autobiographical sonnet in which Milton meditates on his own loss of sight. For most of his life, Milton had been able to see perfectly, but his late-night reading and writing on behalf of the government of the short-lived English Republic, in which he held a very prominent position, helped ruin his eyesight. This sonnet—written in the “Petrarchan” rhyme scheme associated with the fourteenth-century Italian poet Francesco Petrarca—is divided into an eight-line “octave” and a six-line “sestet.” The octave rhymes  abba abba . The sestet rhymes  cde cde . The sonnet is, therefore, a typical Petrarchan sonnet in form, but in subject matter, the poem departs from the topics usually associated with Petrarchan poems. Petrarch (the English version of Petrarca’s name) was most famous for writing about love; Milton departs from that conventional topic to deal with a very practical, very physical problem, but a problem with many broa...
Post a Comment
Read more

Poem 2 - Solitude - by Alexander Pope (Sem IV)

“Ode on Solitude” is a poem written by Alexander Pope. In this poem, the Pope expresses his desire to lead a quiet and secluded life, with minimal assets. The poet prefers to have just a few acres of land. He would not like to go anywhere out of his native region. He would like to breathe the air of his ancestral place. He wants to have a comfortable and self-sufficient life. He would get milk from the herds, food from the fields, wool for clothing from the sheep. He prefers to be under the shadow of trees during summer, and use the wood to make fire during the winter. All that required is good health, peace of mind and quietness.  He would spend his days in study and leisure, and live a life of innocence and thought. The final note is that the poet would like to live an oblivious life, with no necessity to be mourned or missed once he passes away.
Post a Comment
Read more