Purposes of budgets Flashcards
1
Q
What is a budget?
A
A quantified plan of action for a forthcoming accounting period.
2
Q
What is the purpose/Objective of a budget?
A
PRIME
*Planning - Forces management to plan ahead in detail.
*Responsibility - Clarifies what the budget holder can control and who is accountable for achieving the target.
*Integration - Integration and co-ordination between departments/divisions.
*Motivation - Motivates employees to improve their performance.
*Evaluation - Evaluation and control to compare actual performance to budget targets.
