Budgeting is the process of quantifying the plans of an entity in order to achieve its objectives within a certain specified period. Budget is normally used for performance evaluation, cost control and future decision making. (Shields & Young, 1993). A business uses such a budget to evaluate the amount of money that is flowing into the business in a given period, and consider the best way to spend it among different categories of commitments. Incidentally, an entity normally designates a suitable amount of funds to capital expenditure, recurrent expenditure and other categories. By keeping track of where and how money is spent, a business is less likely to overspend; and hence meeting the intended financial objectives. (Hopwood, 2008).
Budgetary Planning and Control may is a short short-term monitoring and quantification of long-term strategic plans of the business. Strategic planning is the process of preparing strategic plans which identifies the objectives of the organisations. Long-term corporate plan is implemented by help of budgeting. Budgets may be prepared for functions, financial departments or resource items. Incidentally, some organisations refer to budgeting as a means of harmonizing the combined intelligence of the entire business into a plan of action.