All organisations have their objectives. Some of the objectives may not be expressed in accounting terms for example objectives to improve the welfare of the staff or to improve the impact on the local environment. However, in this chapter the emphasis is on objectives usually expressed in quantitative terms eg. increase in market share, profit growth, increase in the asset value etc which they wish to achieve. There are three levels of planning – corporate long term planning, medium term planning and annual planning or budgeting. The annual budgets are steps along the way to achieve the long-range plan of the organisation.
To ensure that the objectives are achieved plans or budgets must be prepared.
Definition: A budget is a financial or quantitative interpretation prior to a defined period of time, of a policy to be pursued for that period, to attain a given objective.
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