BUDGETARY COMPARISON Meaning and
Definition
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Budgetary comparison refers to a financial analysis tool used to compare actual financial results with the planned or budgeted figures for a specific time period. It involves the comparison of actual revenues, expenditures, or other financial metrics with the corresponding figures outlined in the budget.
The process of budgetary comparison involves the examination of the actual outcomes and financial standings against the anticipated results or benchmarks set forth in the budget. By comparing the budgeted amounts with the actual results, organizations or individuals can identify any discrepancies, variances, or deviations in their financial performance, allowing them to assess their financial health and make informed decisions regarding future financial planning.
Budgetary comparisons usually include the analysis of various financial aspects, such as revenues, expenses, cash flows, assets, liabilities, and fund balances. They provide a comprehensive overview of how well an organization or individual has adhered to their budgeted goals and objectives, highlighting areas of success or areas that require attention or improvements.
This financial analysis tool is particularly vital for governmental entities, non-profit organizations, and businesses as it assists in ensuring financial accountability, transparency, and efficient resource allocation. By comparing actual financial outcomes with the budgeted amounts, organizations can identify potential savings, cost overruns, or areas where additional funds may be required.
In summary, budgetary comparison is a financial analysis process that involves comparing actual financial results with the budgeted figures to assess variances and monitor financial performance. It aids in evaluating the financial health of an organization or individual and allows for informed decision-making regarding financial planning and resource allocation.
Etymology of BUDGETARY COMPARISON
The word "budgetary comparison" does not have a specific etymology because it is a combination of two separate words.
- "Budgetary" refers to anything related to a budget, which comes from the French word "bougette" meaning purse or wallet. It further derives from Latin "bulga" meaning leather bag or sack.
- "Comparison" comes from the Latin word "comparare" which means to compare, join or couple together.
When these two words are combined, "budgetary comparison" refers to the act or process of comparing budgets or financial plans.
