Discuss the meaning of budgeting,principles of budgeting and steps in budget construction.

Budgeting is the process of designing, implementing and operating budgets. It is the managerial process of budget planning and preparation, budgetary control and the related procedures. Budgeting is the highest level of accounting in terms of future which indicates a definite course of action and not merely reporting.

It is an integral part of such managerial policies as long-range planning, cash flow, capital expenditure and project management.

Principles of Budgeting:

1. Management Support:

Top management’s support and cooperation is essential for successful implementation of the budget. It should take interest not only in setting the targets and finalising the budgets but also constantly monitoring the actual performance to find out the deviations if any and take curative steps, motivate the personnel and reward the good performers.

2. Employees Involvement:

The budget should be established on the highest possible level of motivation. All levels of management should participate in __________ _________ ________ ________ __________.
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