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A budget is an estimation of some certain expenditure and income for a specific future time. It is prepared in the present by the government or management for the future as a set of business objectives. Budget work as a controlling parameter too for smooth and efficient work. It is prepared based on experience, present scenario and future forecast. It is essential to meet a specific set of goals.
First of all, we all should be aware that a system refers to a condition where a set of components work together to achieve a common target. So, a budget system combines various elements like coordination, planning and allocation of the budgeted resources in a company.
Where top management of the business compares the actual performance with the budgeted data and sees the positive and negative variations if management finds any negative variations, it takes further actions to prevent such variations in the future. There are a few objectives of budgetary control:
That is a new way of budgeting in today's modern world. Now the governments or the corporate gives more importance to the budget because the resources are allocated based on outcomes.
Firstly, the outcomes are decided, and then allocations are made accordingly. The utilization of resources is done more efficiently and rationally.
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