Date of Award

5-1958

Document Type

Thesis

Degree Name

Master of Business Administration (MBA)

Department

Accounting

Abstract

The reasoning behind the reluctance of small businesses to utilize budgeting techniques is challenged in this thesis. Budget systems are used successfully by most larger concerns. The author believes that smaller organizations should investigate the feasibility of installing budgetary techniques in order to obtain similar beneficial results.

Current literature provides the basis for discussing the issues relating to budgeting and small businesses. The approach of adapting accepted techniques to smaller concerns is used. The advantages offered in the three phases of budgeting (planning, coordination and control) are introduced; limitations are also presented. Procedures for actual budget preparation, and responsibility, therefore, are pointed out. The desirable budget period is considered. Controlling actual operations, in relation to budgeted figures, is discussed and the idea of flexibility is advanced as beneficial in this regard. The necessity of cost analyses is covered, as well as some methods for achieving them. A simple hypothetical budget system is also presented.

It is the author’s opinion that the budget, as a planning and control tool, can be used effectively by small businesses. To achieve the possible benefits, the proprietors must gain a thorough understanding of budget techniques, and then determine to what extent such techniques can be applied and yet remain practical in the case of each individual firm.

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