What is a budget?

A budget is a financial plan for a defined period, often one year. It may also include planned sales volumes and revenues, resource quantities, costs and expenses, assets, liabilities, and cash flows. Companies, governments, families, and other organizations use it to express strategic plans of activities or events in measurable terms.

What is a budget according to Cima?

The CIMA Official Terminology defines a budget as “A quantitative statement, for a defined period time, which may include planned revenues, expenses, assets, liabilities and cash flows.” A budget is thus, a plan quantified in monetary terms. It is prepared for a defined period of time.

What is budgetary forecast?

It is a forecast of expenses to be incurred on administrative works for budget period. For this purpose, expenses incurred in past years should be analysed. Administrative expenses can be divided into various departments such as legal, accounts, research, planning, public relation etc. 9. Labour Budget:

What makes a comprehensive budgeting programme successful?

The success of a comprehensive bud­geting programme depends on communication of individual budgets to the different units in the organization. The basic point is that the preparation of the budget is of no value unless it is known to the person for whom it is meant.

What is budgeting and how does it work?

What is a Budget? Budgeting is the process of creating a plan to spend your money. This spending plan is called a budget. Creating this spending plan allows you to determine in advance whether you will have enough money to do the things you need to do or would like to do. Budgeting is simply balancing your expenses with your income.

What is the budget of a government?

The budget of a government is a summary or plan of the intended revenues and expenditures of that government. There are three types of government budget : the operating or current budget, the capital or investment budget, and the cash or cash flow budget.

What are the components of a budget?

At the most minimal level, a budget contains an estimated income statement for future periods. A more complex budget contains a sales forecast, the cost of goods sold and expenditures needed to support the projected sales, estimates of working capital requirements, fixed asset purchases, a cash flow forecast, and an estimate of financing needs.

What is a project budget?

Project budget – a prediction of the costs associated with a particular company project. These costs include labour, materials, and other related expenses. The project budget is often broken down into specific tasks, with task budgets assigned to each.

What is the difference between a budget and a forecast?

A budget is usually prepared for the short-term, while the forecasting process happens in the short and long term. Compared to a forecast, a budget is more static. Financial forecasts undergo several adjustments as the business situation, and economic conditions change. Should You Create a Budget or a Forecast For Your Business?

What is the importance of budgeting and forecasting in an organization?

Creating and implementing a sound planning, budgeting and forecasting process helps organizations establish more accurate financial report and analytics — potentially leading to more accurate forecasting and ultimately revenue growth.

What is a fiscal year budget?

Traditionally, a company will designate a fiscal year and create a budget for the year. It may adjust the budget depending on actual revenues or compare actual financial statements to determine how close they are to meeting or exceeding the budget.

What is a financial forecast?

A financial forecast is the quantified outline of the upcoming business activities that express where the company is headed during the forecasted period Budgets are usually prepared for one accounting period. Forecasts include both short-term projections spanning one quarter and long-term estimates spanning several years

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