Evaluation and Comparison Techniques of Budgeting

This Paper presents the Budgeting Techniques and compare between them.A budget is a plan that outlines an organization s financial or operational goals. It is an action plan; it helps a business allocate resources, evaluate performance, and formulate plans.The budgeting process is an essential component of management control systems, as it provides a system of planning, coordination and control for management. It is often an arduous process, however, and often strikes dread in the hearts of those involved in budget preparation.Budgeting is important because it creates accountability and measurability. Any business that seeks to invest its resources in a project, without understanding the risks and returns involved, would be held as irresponsible by its owners or shareholders. Furthermore, if a business has no way of measuring the effectiveness of its investment decisions, chances are that the business will have little chance of surviving in the competitive marketplace.The purpose of this article is to evaluate the two main methods for preparing budgets - the incremental approach and the zero-based approach. Both of these have been used in both public sector and private sector organizations, with varying degrees of success.

Keywords:

Budgeting , Planning , Budgeting process , Budgeting Techniques