Budgeting and Budgetary Control – Complete Lecture Notes (Clear Explanations)

Budgeting and Budgetary Control
Budgeting and budgetary control are important management tools used by organizations to
plan, coordinate, and control financial activities. They help ensure that resources are
used efficiently and organizational objectives are achieved.




Meaning of Budgeting
Budgeting is the process of preparing a detailed financial plan for a future period, usually
one year. It involves estimating income, expenses, and activities of an organization in
advance.

In simple terms, budgeting is planning how money will be earned and spent during a
specific period.




Meaning of Budgetary Control
Budgetary control is the system of comparing actual performance with budgeted figures,
identifying differences (variances), and taking corrective action where necessary.

Budgetary control ensures that:

●​ Actual results do not exceed planned limits
●​ Waste and inefficiency are minimized
●​ Management goals are achieved




Objectives of Budgeting and Budgetary Control
The main objectives include:

●​ Planning future activities
●​ Controlling costs and expenditure
●​ Coordinating different departments
●​ Improving efficiency
●​ Ensuring optimum use of resources
●​ Facilitating decision-making