Essay On The Importance Of Budgets

It is well recognized that budget are among the essential tools of management of any organization unlike other management aids, budgets are made use of practically by all functionaries in the organization. Budgets not only reflect the plan of action for different levels of management but are also useful to monitor various activates and initiate mid course corrective actions. Budgets just do not reduce the managerial function to a mere formula but aids as a managerial tool.

Hence”effective use” of this art as well science. Thus it needs continuous budget education and creation of evaluation and performance through budgets. Budgets provide management summarized picture of the results to be expected, also forms the proposed plan of operations.

Ideas of the top management are given the shape of the budget and are passed on the subordinates who are to give them the practical shape. As the activities of various departmental heads are coordinated at the preparation of budget, it is helpful in developing a team work which is very much needed for the very success of an organization. Thus, a budget is necessary to plan for the future, to motivate the staff associated, to coordi9nate the activities of different levels. A budget is an overall blue print of a comprehensive plan of action expressed in physical and financial terms; it includes plan for each of the activity responsibility centers of the business and provides a link between the physical and financial plans of various departments of a company. It is also a document to serve as control for monitoring and review. The budget system should be such that it makes it imperative for management to establish goals and objectives, define policies, develop programmers’ both long term and short term, measure performance against the targets and in the process, revises the part of management. In a way of budgetary control system has been increasing an enterprise’s profits, and a goals-achieving machine for facilitating organizational coordination and planning while achieving the budgeted