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Budgetary Accounting: Budgets and Budgetary Control
Budgetary Accounting: Budgets and Budgetary Control
Budgetary Accounting: Budgets and Budgetary Control
Accounting
Budgets and Budgetary
control
What is a budget?
A budget is a well detailed financial plan for a
future period.
Advantages of cash Budget
Preparing a cash budget has a number of benefits:
It can identify any times where there may be a shortage
of cash. This will allow the business to plan ahead and
arrange extra funding such as a bank overdraft.
It can help to regulate expenses. Any months where
expenses are high will be highlighted by a cash budget.
It will clearly show where a business has more cash
than expected (surplus) or less cash than expected
(deficit). This will allow a business to plan more
effectively and make better decisions.
Categorizes of budgets
Fixed budgets
Flexible budgets
Zero-based budgets
Types of Budgeting
Production budget
Sales budget
Material budget
Cash budget
Labour budget
Master budget
What is variance?
The difference between actual results and
budgeted figures of the firm.
(Actual – Budgeted)
Variance
Favourable (positive)- where the actual figure is
higher than the budgeted figure.