Budgetary Planning, Control and Responsibility Accounting

Running head: BUDGETS 1 

Budgetary Planning, Control and Responsibility Accounting 

Budgeting planning, control, and responsibility accounting are crucial in the effective operations of any business enterprise. Budgetary planning entails the Construction of a budget and then utilizing it to control business operations. Budgetary planning is a significant factor aimed at mitigating the risks of having the corporation’s financial results to come out worse contrary to expectations. Further, budgetary planning is resourceful in planning ahead, provision of definite objectives for performance evaluation, and efficient coordination of business activities among others (Kimmel, Weygandt & Kieso, 2010). Unrealistic budgets are dangerous to the business; they can potentially lead to unethical employee behavior for instance distortion of internal financial reports and cutting corners while carrying out business activities. The institutional administrators and managers often utilize a master budget to ascertain if the corporation has met its target for a variety of things like production expenses, sales, net income and selling, and administrative expenses (Kimmel, Weygandt & Kieso, 2010). 

A Budget is a significant tool utilized by the management of an organization for the control of operations. Budgetary control is carried out by the use of budget reports that perform a comparison between the actual results with the planned objectives. Responsibility accounting is used by almost all companies that distribute duties down through the cooperate hierarchy. Minus some form of responsibility accounting, lots of chaos would be present when discharging management control function (Kimmel, Weygandt & Kieso, 2010). Responsibility accounting is more of reporting systems that collect costs, profits and revenue information at the individual manager’s level that are most responsible for them. It thus plays a fundamental role in the provision of information to the individuals that are most capable of acting upon it; and as judge their performance (Weygandt, Kimmel & Kieso, 2015). 

Reference 

Kimmel, P. D., Weygandt, J. J., & Kieso, D. E. (2010).  Financial accounting: tools for business decision making . John Wiley & Sons. 

Weygandt, J. J., Kimmel, P. D., & Kieso, D. E. (2015).  Financial & managerial accounting . John Wiley & Sons.