Explain the relationship between the selected budgeting techniques and the organisation budgeting requirements

Answer 1

Budgeting techniques vary based on the specific needs and requirements of an organization. The selected budgeting techniques must align with the organization's budgeting requirements to effectively manage finances and achieve financial goals.

For example, if an organization has highly variable expenses and income, they may choose to use flexible budgeting techniques such as zero-based budgeting or rolling budgets. These techniques allow for greater flexibility in adjusting budgets based on changing circumstances and may be more suitable for organizations with unpredictable cash flow.

On the other hand, organizations with stable revenue streams and expenses may opt for traditional budgeting techniques such as incremental budgeting or activity-based budgeting. These techniques allow for more long-term planning and may be better suited for organizations with more predictable financials.

By aligning the selected budgeting techniques with the organization's specific budgeting requirements, the organization can effectively allocate resources, track performance, and make informed financial decisions. This ensures that the budgeting process is tailored to meet the organization's unique needs and goals, leading to greater financial stability and success.