What is the Difference Between Budget and Budgetary Control?
🆚 Go to Comparative Table 🆚The main difference between a budget and budgetary control lies in their purpose and process.
A budget is an estimation of revenues and costs for a specific period of time, typically covering all functional areas of a business. It is a financial plan that outlines the organization's objectives and the steps needed to achieve them. Budgets are prepared before the beginning of the accounting period and are used to allocate resources effectively, make decisions, and plan for future activities.
Budgetary control, on the other hand, is a process used to evaluate the budgeted results. It involves constantly comparing actual expenditure and revenue to the budget targets to reveal any discrepancies and deal with them if needed. Budgetary control is a method of managing costs through the preparation of budgets, comparing actual performance against budgeted projections, and taking corrective or improvement actions based on the results. This process is typically carried out at the end of the accounting period.
In summary, a budget is a financial plan for a specific period, while budgetary control is a process used to evaluate and manage the budgets created. Budgetary control ensures that the budget is implemented effectively and helps organizations achieve their financial goals.
Comparative Table: Budget vs Budgetary Control
Here is a table that highlights the differences between a budget and budgetary control:
| Aspect | Budget | Budgetary Control |
|---|---|---|
| Definition | A budget is an estimation of revenues and costs for a specific period. | Budgetary control is the process used to evaluate the budgeted results and compare actual costs with budgeted costs. |
| Purpose | A budget is a financial plan that covers a specific future period and is an expression of income and expenditures over that period. | Budgetary control is a cost control technique that compares actual cost to budgeted cost, identifying variances and taking corrective measures. |
| Preparation | Budget preparation occurs prior to the beginning of the accounting period. | Decisions relating to budgetary control are taken at the end of the accounting period. |
| Inclusion | Estimations of revenues and costs are included in budgets. | Both estimations and actual revenues and costs are included in budgetary control. |
| Process | Budget is concerned with policy framing. | Control is the budgetary implementation of the policy. |
| Objectives | A budget's main objectives include planning, policy framing, and providing a basis for monitoring progress towards organizational objectives. | The main objectives of budgetary control are production efficiency, smooth production chains, and maximizing overall profit. |
In summary, a budget is a financial plan for an organization that covers a specific future period and is an expression of income and expenditures over that period. Budgetary control, on the other hand, is a cost control technique that compares actual cost to budgeted cost, identifying variances, and taking corrective measures to ensure that the organization's objectives are met.
- Standard Costing vs Budgetary Control
- Costing vs Budgeting
- Budgeting vs Forecasting
- Budget Deficit vs Fiscal Deficit
- Flexible Budget vs Fixed Budget
- Capital Budget vs Revenue Budget
- Cost Control vs Cost Reduction
- Budget Surplus vs Budget Deficit
- National Debt vs Budget Deficit
- Master Budget vs Cash Budget
- Zero Based Budgeting vs Performance Budgeting
- Fiscal vs Monetary Policy
- Master Budget vs Flexible Budget
- Controllable vs Uncontrollable Cost
- Internal Audit vs Internal Control
- Incremental vs Zero-based Budgeting
- Cash Budget vs Projected Income Statement
- Strategic vs Financial Planning
- Internal Check vs Internal Control