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Budget Formats The purpose of this paper is to cr

The purpose of this paper is to critique the principal budget formats used by public sector and non-profit organizations. In this critique, the strengths and weaknesses of each budget format are identified, and their managerial implications are stated.

A budget, as a noun, is a detailed financial plan for the organization, which (1) describes financial resources expected to be available to the organization during the period covered by the budget, (2) identifies anticipated sources of the financial resources, and (3) provides a plan for the allocation and use of the identified financial resources (Garrison, 1985, p. 274). Budgeting, as a verb, is the process by which a budget is created (p. 275).

There exist a variety of budget types, and a variety of processes by which budgets may be created. This research is

concerned with those budget types, referred to as formats, which are most often used by public sector and non-profit organizations.

The traditional budgeting process used by non-profit and public sector organizations is incremental in character (Lynden, & Lindenberg, 1983, pp. 61-64). Incremental in a budgeting process means that future budgets are based, in part, on past budgets. One of the three general types of incremental budgets used by non-profit and public sector organizations is the objects of expenditure budget (the other two incremental formats of interest are program budgets, and performance budgets) (pp. 66-79; Mikesell, 1986, pp. 141-155).

In an objects of expenditure budget, all of the various types of goods and services which must be acquired and used by an organization are itemized in the budget (Lynden, & Lindenberg, 1983, p. 66). The original motivation for this budget format, and still the greatest advantage of this type of budget is that it opens to public exposure exactly what it is that money is used to buy by non-profit and public sector organizations. The disadvantage of this budg...

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Budget Formats The purpose of this paper is to cr. (1969, December 31). In LotsofEssays.com. Retrieved 02:55, March 29, 2024, from https://www.lotsofessays.com/viewpaper/1702636.html