What is meant by 'budgetary control'?

Budgetary control refers to the process of comparing actual financial outcomes to the budgeted figures. This is an essential aspect of management accounting, as it allows organizations to assess performance and make informed decisions based on the variances between budgeted and actual figures. Through analyzing these variances, management can determine where the business is performing well and where there might be deficiencies or areas for improvement. This feedback loop is crucial for effective financial management and aids in future planning and control.

Management can use this information to adjust operations, allocate resources efficiently, and implement corrective actions if the actual performance deviates significantly from the planned budget. In essence, budgetary control is vital for ensuring that financial objectives are met and can guide strategic decisions in a timely manner.