Managerial Accounting - Essay Example

Similarly, the planning must incorporate the limitations that the organizations have while, at the same time, focusing on the long term goals and desires of the organization; this can only be done through effective budgeting and further budget control. It is indispensable tool for measuring performance. The success of any worthwhile organization is hinged on a good budget because it gives a platform where income and expenditure estimates are done at an advance date by use of historical data.

By so doing, the budget helps the organization in different ways such as control, coordination and eventual measurement of the organization. Through the same, the organization can derive motivation geared towards a better future (CHONG et al 2007). According to CARPENTER (2006) a budget is defined as a tentative quantitative manifestation of future expectations and, is usually prepared by the management of any organization. There are different types of budgets and are concerned with planning for the future.

If done in the right manner, a budget can serve as a means of control within the organization since in it are all the organizations plans, goals and key performance initiatives and indicators. They are usually prepared either annually or monthly or at any other interval, depending on the need. The significance of budgets is that they allow the management of the organization to take a look at the past failures and success; and that helps in formulating the best strategies for the future. The advent of 21st century has a brought with it many complications for different organizations.

As such restricting within organization is inevitable; budgeting and control have become integral part of the organizations since it is clear that they have a big role in the general performance of the organization. In that regard, many financial and lending institutions have put much focus on budgeting as a tool of establishing performance in any organization. Similarly,