ABSTRACT
An annual budget is probably the essential first step in any system of financial control and management. The process of the preparation of the budget focuses attention on a number of important issues including:
the overall level of finance available
the allocation of the total to the main items of expenditure, e.g. wages, machinery, etc.
the sub-allocation of resources to specific projects or, in the case of large organizations, to area managers the necessary framework for cost control and monitoring throughout the year
the expected levels of income, for trading organizations, and therefore the cost ceilings necessary for desired profit levels the capital requirements, for machinery, etc.
anticipated inflation of wage and other costs.
