Financial and Managerial Accounting

In: Business and Management

Submitted By atay2015
Words 1844
Pages 8
COURSE NAME: MBA-621-FINANCIAL AND MANAGERIAL ACCOUNTING
NAME: ANGELINA TAYLOR
STUDENT ID: R1402D57229
DATE: 25-11-2015

ASSIGNMENT TWO

Part 1- Planning and Control 1) The primary purpose of a budget

The primary purpose of a budget is to serve the needs of management in respect of the judgments and decisions it is required to make and to provide a basis for the management functions of planning,c ontrol, communication and motivation.

J R Dyson noticed the following about the usefulness about a budget: It forces management to look forward rather looking back, it encourages management to examine what they have done in relation to what they could do and prominently budgeting helps management in control through the constant comparison of actual results with budgeted results, and then taking any necessary corrective action. Dyson J R (Accounting For Non-Accounting Students. Pg. 377).

From the above the main purpose (considering the question) is all of directing, giving attention, problem solving and a few more like control and motivation.

Budgets aid planning, which gives a business direction. A budget takes the organizational plan (goal and objectives) and quantifies this into something tangible to aim for. Budgets, by defining where the business is going and how it would get there help management and employees alike to focus.

Some budgets even go further in reinforcing this focus by listing what will not be done in the period it will cover. Budgets tend to promote forward thinking and the possible identification of short-term problems. Discovering a potential problem early enough allows for both the formulation of multiple solutions and gives managers time for calm and rational consideration of the best way of overcoming these problems.

2) How do Strategic planning, long range planning and budgeting differ Strategic…...

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