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Budget, Budgeting and Budgetary Controls – Part 2 Quiz !

Budget, Budgeting and Budgetary Control

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Budget, Budgeting and Budgetary Controls is intimately connected with budgets. The Chartered Institute of Management Accountants, London defines Budgetary control as “the establishment of budgets, relating the responsibilities of executive to the requirements of a policy and the continuous comparison of actual with budgeted results either to secure by individual action the objectives of that policy or to provide a firm basis for its revision”. A budgetary control system secures control over performance and costs in the different parts of a business:
(i) by establishing budgets
(ii) by comparing actual attainments against the budgets; and
(iii) by taking corrective action and remedial measures or revision of the budgets, if necessary.
The budget is a blue-print of the projected plan of action expressed in quantitative terms and for a specified period of time. The budgets put the plan in a concrete form and follow up action to see that plan is adhere to complete the system of control. In other words, while budgeting is the art of planning, budgetary control is the act of adhering to the plan. In fact, budgetary control involves continuous comparison of actual results with the budgets and taking appropriate remedial action promptly.

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