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Budgeting and Responsibility Accounting: Knowing the subject!
Budgeting refers to the process of designing and implementing a budget and includes budget operations. It mainly focuses on short-term budgeting including resources provision for supporting plans being at the stage of implementation. A budget is planned and drawn up at the start of a fiscal year, and it is used to regulate all the business operations during the entire year. This helps lower all operational risks, including any type of wastage.
Responsibility accounting means collecting, summarizing and reporting financial data regarding different decision centers all through a company or organization. It is also known as activity accounting or profitability accounting and helps track profits, revenues, costs,etc. to managers associated with decision-making and taking actions related to the same.
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What must students know about this subject?
Budgeting is important in economics and also plays a vital role in the management of any business. It helps establish budgets related to the responsibilities of policy executives and assists in constant comparison of the actual results with the goals envisioned in the budget planning. Responsibility Accounting is important for taking important business decisions for the growth of a business.For a long time, traditional accounting control systems have accepted Responsibility accounting as a major part – given that it offers a number of benefits to an organization. Both Budgeting and Responsibility Accounting are essential for the management and smooth operations of any organization or business.
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