Budget Meaning :It is a plan which is quantified in monetary terms for a period of time in the future.

Budget Definition : According to Chartered Institute of Management Accounts, London(CIMA), A budget is a plan expressed in money. It is prepared and approved prior to the budget period and may show income, expenditure and the capital to be employed . Budget Functions: It indicates the exact timing of the firms needs for future financing. Taking corrective action Basis for performance evaluation

Budgeting: It is a technique of for formulating budgets. It helps the management to anticipate the various problems of the business and to put corrective measures to overcome the problems.

Budgetary Control: It is a technique of managerial control through budgets. It is designed to assist management in allocation of various responsibilities. It is a system of achieving the firms objectives with minimum cost and provides a powerful tool to the management for efficient performance of management functions.

Planning : It helps the management to decide what to do, how to do it, when to do and who is to do it. Communication: All the employees should be aware of the aims and objectives of the budget. Coordination: It indicates the harmonisation of all the activities of the organisation. Control: Helps in comparison of budgeted standard and actual performance. Appraisal and organisation Follow-up: analysis of performance of the

Organization Chart: It is a graphic representation of organisation structure. Budget Centre: It is an entity from where control may be exercised. Budget Officer : Coordinates the work connected with budgeting Budget Committee: Preparation and execution of budget. Budget Period: Duration of a budget. Budget Manual: Guidelines to prepare the budget.

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CAPACITY

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PERIOD

FUNCTIONAL MASTER FIXED BUDGETS BUDGETS BUDGET

FLEXIBLE BASIC BUDGET BUDGET

CURRENT LONG TERM SHORT TERM BUDGET BUDGET BUDGET

Functional Budget: It is budget of income and/or expenditure related to a particular function. It includes Sales Budget, selling and distribution cost budget, production budget, production cost, personnel budget, capital expenditure budget, administration cost budget, cash budget, etc. Master Budget: Also known as summary budget it consolidates all the functional budgets and forecasts the profit and loss account and the balance sheet for the budget period.

Fixed Budget: It is a type of budget which does not change with change in activity. According to I.C.M.A. a budget designed to remain unchanged irrespective of the level of activity actually attained. Flexible Budget: It is also known as variable budget. According to I.C.M.A a budget which is designed to change in accordance with the levels of activity actually attained.

Basic Budget: It is a type of budget which is prepared for a long period of time. It is remaining constant and is of little use in the industry. Current Budget: It is a budget which is prepared on the basis of current information and conditions and used for short period of time. As compared to basic budget, current budget is of much use in the business field.

Long-term Budget: It is a budget which is prepared for more than a period of one year. It is useful for long-term decision making. For example: research and development and cost budgets. Short-term Budget: It is a budget which is prepared for less than a period of one year. It is useful for short-term decision making. For example: cash budget, production budget, sales budget,etc.

One of the most modern management tools which helps in planning and controlling expenditures. Every manager has to justify his entire budget. Why money should be spent at all? Sets asides previous years inefficiencies and extravagances. Cost Benefit Analysis Decision Packages The basic concept of ZBB is the projection of profit by planning uncertainty which may occur in the future.

It takes into account the physical aspects of the organisation i.e., the performance aspects. It is popularly used in government departments. It provides output-oriented budget information for a long period of time. What is to be achieved, why is to be achieved , how it is to be achieved and when it is to be achieved. It is extremely useful in planning and controlling various resources.

Valuable aid to management Managerial Performance Harmony and Morale Efficiency and facilitates management Cost Consciousness

It may or may not be true Budget is not a substitute of management It cannot be executed automatically It brings about rigidity in control Lengthy, time-consuming and expensive.