Budgetary control is the process by which financial control is exercised within an organisation.
Budgets for income/revenue and expenditure are prepared in advance and then compared with actual performance to establish any variances.
Managers are responsible for controllable costs within their budgets and are required to take remedial action if the adverse variances arise and they are considered excessive.
There are many management uses for budgets. For example, budgets are used to:
Whilst there are many uses of budgets, there are a set of guiding principles for good budgetary control in a business.
In an effective budget system:
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