BUDGET AND GUDGETARY CONTROL AS A MANAGERIAL TOOL IN AN ORGANIZATION
2.1 INTRODUCTION
This chapter is devoted to the review of relevant literature and contributions of several authors and researchers to the area of budgeting.
In this chapter, the historical perspective and the basic principles of budgeting will be discussed.
Various definitions for a successful budget administration and budget preparation process will be looked into. Also, to be discussed in the principle budget factors, details of total periodic budget and budget review as well as advantages and difficulties of budget, plus definitions of key terms used in the study.
Budgeting may be defined as “financial and or quantitative statement prepared and approved prior to a defined period of time, of the policy to be pursued during that period for the purpose of attaining a given objective. They may include income, expenditure and the employment of capital” (I.C.M.A – Terminology of the Institute of Cost and Management Accountant).
“a budget has also been defined as comprehensive and co-ordinate plan, expressed in financial terms, for the operation and resources of an enterprise for some specific period in the future (Fregman, J.M. accounting for managerial analysis Home wood III, Richard Inc. 1973).
The basic elements of a budget are:
It is a comprehensive and co-ordinate plan
It is expressed in financial terms
It is a plan for the firms operation and research
It is a future plan for a specific period
