In the chapter on Planning and Control (Chapter 14) four stages of the planning and control process were identified. The third stage, which was described as ‘Making operating decisions’, focused on the use of resources and the individual decisions necessary to use these resources consistently within the overall objectives of an organization. In this stage it was also stated that the decisions would be translated into a short-term plan, normally referred to as a ‘budget’. Budgets were defined as ‘plans of action expressed in monetary terms’. In this chapter we shall be examining the purpose of budgets, the budgeting process, and the preparation of budgets.
KeywordsCash Flow Balance Sheet Stock Level Budget Process Cash Surplus
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- The importance of behavioural factors in the budgeting process is well documented in Accounting and Human Behaviour,Chapters 3 and 4, by A. Hopwood (Prentice-Hall International, 1974).Google Scholar
- A detailed account of variance analysis can be found in Managerial Accounting: Method and Meaning,by R.M. Wilson and W.F. Chua, 2nd edn (Chapman and Hall, 1992).Google Scholar
- Organizational issues, in respect of budgeting, are well represented by Accounting for Management Control,Chapters 6 and 7, by C. Emmanuel, D. Otley and K. Merchant, 2nd edn (Chapman and Hall, 1990).Google Scholar