BUDGETARY CONTROL Meaning and
Definition
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Budgetary control is a financial management process that involves the establishment of budgets and the close monitoring of actual performance against these budgets. It enables organizations to exercise control over their financial resources and ensure that they are allocated and utilized effectively and efficiently.
The process of budgetary control includes several key steps. First, a budget is prepared, which involves setting financial targets for various areas and departments within the organization. These targets are typically based on forecasts and assumptions about future performance and can cover areas such as revenue, expenses, and capital expenditure.
Once the budget is established, actual performance is regularly compared against these targets. This monitoring can involve the use of financial reports and indicators to assess whether the organization is on track or experiencing deviations from the plan. If discrepancies are identified, corrective actions can be taken to bring actual performance back in line with the budget.
Budgetary control allows organizations to have a comprehensive overview of their financial status and performance, enhancing decision-making and enabling effective resource allocation. It helps management identify areas where costs can be reduced or revenue can be increased, facilitating the achievement of financial goals.
The budgetary control process is also beneficial in enabling effective communication and coordination across different departments and teams within the organization. This coordinated effort ensures that financial resources are utilized in the most efficient and effective manner, aligning with the overall strategic objectives of the organization.
In summary, budgetary control is a financial management process that involves the establishment, monitoring, and control of budgets to ensure effective utilization of financial resources and achievement of financial goals.
Common Misspellings for BUDGETARY CONTROL
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Etymology of BUDGETARY CONTROL
The word "budgetary control" is derived from two separate terms: "budget" and "control".
The term "budget" originated from the Latin word "bulga", which means a leather bag or pouch. In the medieval period, it took on the meaning of a small bag or purse used to hold money. Over time, the term evolved to refer to the entire amount of money allocated for a specific purpose or period.
The term "control" comes from the Latin word "controllare", which means to check or verify. It later took on the meaning of regulating or managing something to ensure it adheres to a certain standard or goal.
Therefore, when combined, "budgetary control" refers to the process of managing or regulating the budget to ensure effective financial management.
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