A business enterprise should keep a budget other than the other statements it keeps. Discuss reasons why this activity is important.

  • Business is done to compare the actual results with the budgeted plans.
  • Aids in communication e.g. employees are fully aware of tasks to undertake within a certain period of time i.e. time budget.
  • Increase efficiency as everyone want to accomplish what is expected of them.
  • Evaluation of performance to know what was achieved according to the budget and what was not and why.
  • Avoid time and money wastage as each is accounted for at the end of the period.
  • Know output of employees as each departments achievement are seen.



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