Learning Materials For Accounting, Management , Finance And Economics.

Friday, February 18, 2011

Limitations Or Disadvantages Of Budgeting

Following are the main limitations or disadvantages of budgeting:

* It is difficult, if not impossible, to estimate revenues and expenses in a business enterprise realistically.

* It is not realistic to write out and distribute a company's goals, policies and guidelines to all the supervisors.

* Budgeting places too great a demand of time on management, especially to revise budgets constantly. Too much paper work is required for budgeting.

* Budgeting takes away management flexibility.

* Budgeting creates a lot of behavioral problems.

* Budgeting adds a level of complexity that is not needed.

* Budgeting is too costly, aside from the management of time.

* The managers, supervisors and other employees hesitate with budgeting.