budgeting

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budgeting

the process of preparing BUDGETS and exercising BUDGETARY CONTROL. Budgeting encourages forward thinking by managers; serves to help coordinate different functions and departments in the firm; defines the responsibilities of individual managers; provides a framework for delegating responsibility; and provides incentives by setting standards of achievement. Budgeting also provides an instrument for control by pointing out where corrective action is required and a basis for modifying plans where necessary Finally budgeting enables managers to practise MANAGEMENT BY EXCEPTION concentrating only on important deviations from plans.