Question

In: Accounting

Would you recommend the use of budgeting for contemporary organisations for planning and control purpose?

Would you recommend the use of budgeting for contemporary organisations for planning and control purpose?

Solutions

Expert Solution

Yes, budgeting is recommended for contemporary organizations for planning and control purpose because:-

1. Budgeting aid in planning which acts as a source of business direction. The organizational concrete idea about how to plan in theoretical form is turned into a tangible form. This aids in planning and anticipating future business conditions to avoid unforeseen problems.

2. Budgeting also plays a vital role in controlling the organization. Actual performance is compared with budgeted performance and then deviations are investigated for future control in costs.

Since contemporary organizations are keen on having limited managers, therefore, budgeting is quintessential in managing the organization.

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