Keeping Control of Budgets.

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Accounts are essential for ensuring that directors and managers are accountable to the shareholders and that they act honestly and efficiently in the interests of shareholders.

Financial accounts are also produced for the benefit of creditors, prospective creditors and prospective investors. In addition by tax authorities require the accounts of business to assess tax liability.

Customers, suppliers, the community at large and employee may also be interested in company accounts.

Keeping Control

Keeping control of money is part of life. Is there enough money in the bank to pay the electricity bill? Can we afford that expensive holiday?

Efficient people keep records that allow them to answer these questions quickly and easily. The same principles apply to business. Keeping records provides information that:

  • gives early warning of the problems the business might be facing. The business can then take action to avoid these problems;

  • saves time (and therefore money) when  information is needed;

  • makes it easier for the business to stay within the law, as all business have to keep accounts for tax purposes.


A budget is a short-term plan of action outlining what the business wants to achieve, what it needs to do to reach its goal and how much it will cost.

Budgets act as a control for the business because they set targets and the people running the business can check to see if they are reaching these targets. To ensure the success of a budget, the following should be considered:

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  1. the targets have to be realistic;

  1. people have to be involved in drawing up the budget;

  1. there should be some incentive for reaching the target (e.g. a bonus).

Cash budget

When it comes to looking after our own finance, we all know that we have to take some form of responsibility.

If we spend too much, we will soon run out of money. We will then either have to go without things that we need, or borrow in order to get them. But if we borrow, can we pay back the lender?


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