Budgeting Process Divided Into Relevant Sub Headings

987 Words4 Pages
Primarily cost and management accounting is meant for providing information to the management to enable them making planning and control. Budgeting and budgetary control are tools which can be used by the management to efficiently discharge both the management functions. Budgeting is formal management plan of actions incorporating estimated qualitative and/quantitative facts and figures. Cost analysis, on the other hand, is a process of evaluating, and analysing cost data according to their nature and behaviour to changing circumstances. Effective cost analysis is a prerequisite for preparing different meaningful flexible budgets and also for making effective comparison between budgeted and actual results. The rest of the paper consists of…show more content…
impact the cash position at the end of definite periods. The balance at the end of periods will show whether there is sufficient cash to carry out planned activities, and if not how much is to be borrowed and what will be the interest payment schedule and how that will impact subsequent balances and also how much needs to be acquired through sale of securities in case of expansion program. Cash budget also shows whether fund is lying idle which needs to be invested in profitable channels. Thus convergence of cash budget and organisational plans, goals, and strategies can be made possible by aligning available cash and acquisition of additional fund with the capital expenditure requirement (Brownell 1981).
Time frame of cash budget: The period of time covered by a cash budget depends on the type of business, management planning needs, and cash position. A cash budget may generally be related to the following time periods:
1. Operational cash planning: Cash budget may be prepared for any time period in order to meet information requirement of the management. This type of cash budgeting is primarily meant for dynamic control of cash balances to minimize interest cost on loans and opportunity cost deriving from the idle cash in the business.
2. Short-range: short-range cash

More about Budgeting Process Divided Into Relevant Sub Headings

Get Access