Question

Strategic Management Accounting Questions

Explain your understanding of a BUDGET.                                                  2 Marks

Identify two purposes of a budget.                                                                3 Marks

Discuss two reasons a budget has to in harmony with the strategy of the organisation.

5 Marks

Answer 1

A budget is an estimation of income and costs over a predefined future timeframe; it is aggregated and rethought on an occasional premise. Spending plans can be made for a man, a family, a gathering of individuals, a business, an administration, a nation, a global association or pretty much whatever else that profits. At organizations and associations, a financial plan is an inside apparatus utilized by administration and is frequently not required for revealing by outside gatherings.

purpose -

-Helps in covering short term plan

- helps in motivating employees.

- Set benchmark for controlling activities.

Budget has to be in harmony with strategy of business organisation because :-

- budget will act as a bench mark for the goals and activities of the organisation.

- It will helps in evaluating the performance of the employees and of organisation as a whole which would have been decided by the top level management.

- More over budget acts as mission for the vision of organisation.