Zero Planning, Mid-term

Appraisal, Capital &

Revenue Expenditure
Presented by: Rashmi Goswami
 BUDGET
• A budget is a plan that uses numerical data to predict the
activities of an organization over a period of time and it
provides a mechanism for planning each units needs and
contribution.
 ZERO BUDGETING
Introduction
A method of budgeting in which all
expenses must be justified for each new
period. Zero based budgeting starts from
a “zero base” and every function within
an organization is analyzed for its needs
and costs.

Budgets are then built around what is

needed for the upcoming period,
regardless of whether the budget is
higher or lower than the previous one.
 Definition
“A method of budgeting where by all activities are revaluated
each time a budget is set. Describe levels of each activity are
valued and a combination chosen to match funds available.”
- C.I.M.A london
 Features
All budget item both old and new proposed are considered totally afresh.

Amount to spent on each budget item is to be totally justified.

Department objectives are linked to cooperate good.

The main step is not on ‘how much’ a department will spend but on ‘why’ it need
to spend.

 Unwanted activities and projects are dropped and desirable and wanted projects are
included.
 Steps of zero base budgeting:
Ranking
decision
Calculate the making of
cost for each each package.
Each package package from
should have the base zero.
Divide the its goals
programme activities and
Identify cost into package
centres needed
resources.
 Advantages

• It forces the nurse manager to plan each programme package afresh.

• Avoid the common tendency in budgeting of looking at changes from a
previous period.
• Efficient allocation of resources.
• Detect inflated budget.
• Cost effective ways to improve operation.
• Increase staff motivation, communication and coordination within the
organization.
 Disadvantages
• Difficult to define decision unit and decision package.
• Forced to justify every detailed related to expenditure.
• The identification of decision units and decision package creates
number of problem for the organization (decentralized)
• The process of zero base budgeting requires experience, intelligence,
expertise and continuous training on the part of executives. Thus, it is
not suitable for an ordinary organization.
 MID TERM APPRAISAL

• The mid term appraisal (MTA) reviews the experience in the first
three years of the five year plan and seeks to identify area where
corrective steps may be needed.
• Provides an opportunity to take stock of the economy and to introduce
policy correctives and new priorities, the success achieved on the
investment front.
• Mid term appraisal presents a candid assessment of the resources
position facing both the centre, state and the implication.
To analyze the proper utilization of the budget.
To stop miss utilization ofNeed for
the budget. MTA
To ensure adequate use of resources.
To avoid wastage of manpower.
To do necessary modification if necessary.
To over view performance and problem.
To evaluate the efficiency of staff.
 CAPITAL EXPENDITURE
• The expenditure incurred for accusing a fixed asset or
which results in increasing the earning capacity of the
business is known as Capital expenditure.
• The benefit of capital expenditure are generally
availed in several accounting years.
 REVENUE EXPENDITURE
An expenditure incurred in the course of regular business
transactions of a concern are availed during the same
accounting year is known as Revenue expenditure.