COMMERCE 2AB3 Chapter Notes - Chapter 10: Accounts Payable, Indian Railways, Main Source
12 Feb 2020
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Document Summary
A budget is a a formal written statement of management"s plans for a specified future time period, expressed in financial terms. Primary way to communicate agreed-upon objectives to all parts of the company. Control device - important basis for performance evaluation once adopted. Accounting data help in formulating future budgets. Accountants responsible for budget goals in financial terms translate management"s plans and communicate the budget to employees. Prepare periodic budget reports that provide the basis for measuring performance. The budget and its administration are management"s responsibility. Requires all levels of management to plan ahead and formalize goals on a recurring basis. Provides definite objectives for evaluating performance at each level of responsibility. Creates an early warning system for potential problems. Facilitates coordination of activities within the business. Results in greater management awareness of the entity"s overall operations and the impact of external factors. Motivates personnel throughout organization to meet planned objectives.
