Outline the purpose of budgets within organizations

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tripu | College Teacher | (Level 2) eNoter

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A budget is of utmost importance to any organization. No organization will take a single step forward without a proper budget.

For example an Army prepares action plan before starting with a war, An architect prepares architectural design before starting the construction of a building, in the same way a business man needs a road map with regard to financial outlay needed for a project and that is nothing but a budget.

A budget is action plan or a blue print prepared in advance of action. Every department of organization needs a budget, that's why there various functional budget within  an organization like-

(1) Purchase budget.

(2) Sales budget.

(3) Material consumption budget.

(4) Production budget.

(5) Cash budget and finally

(6) the master budget which includes all the functional budget.