Scribd Logo
Upload

Welcome to Scribd!

  • 3 views

    Budgeting Notes 1

    Uploaded by

    rakshanavles

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd

    Budgeting Notes 1

    Uploaded by

    rakshanavles
    3 views4 pages

    Copyright

    © © All Rights Reserved

    Available Formats

    PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    3 views4 pages

    Budgeting Notes 1

    Uploaded by

    rakshanavles

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    You are on page 1of 4

    BUDGETING NOTES

    CONTENTS :

    ● MEANING OF BUDGET
    ● COMPARISON BETWEEN BUDGETING AND FORECASTING
    ● TYPES OF BUDGET
    ● UTILITY OF BUDGET

    1. Meaning of Budget

    A budget is a detailed plan for operations during a specific time period.

    It involves estimating income and expenses for a future period.

    Budgets are created to plan and achieve goals, whether personal, academic, or
    business-related.

    It’s a formal expression of financial goals and a roadmap for managing resources.

    2. Comparison between budgeting and forecasting

    Aspect BUDGETING Forecasting

    1. Definition Detailed plan for future Estimation of future outcomes


    operation based on trends

    2. Time frame Specific , defined period Ongoing , revisited as


    needed

    3. Detail level Comprehensive involving Higher level focuses on


    policies and action plans probable outcomes

    4. Purpose Goal setting and resources Predicting trends to inform


    allocation strategy
    3. Types of Budget

    1. Sales Budget

    A forecast of expected sales for a specific period.

    Helps in planning production and resource allocation.

    Includes quantity, price, and total revenue expectations.

    2. Production Budget

    Outlines the number of units that need to be produced to meet sales demands.

    Takes into account inventory levels and production capacity.

    3. Cash Budget

    A detailed estimate of cash inflows and outflows during a specific period.

    Ensures that the organization has enough liquidity to meet short-term obligations.

    4. Purchase Budget

    Plans for the procurement of raw materials or goods needed for production or sale.

    Factors in existing inventory levels and anticipated requirements.

    5. Master Budget

    A comprehensive budget that consolidates all other budgets (e.g., sales, production, cash).
    Provides an overall financial plan for the organization, including income statements and balance
    sheets.

    4 . Utility of budget

    1. Sound Planning

    A budget provides a framework for effective planning.

    It helps set clear objectives and allocate resources to achieve specific goals.

    2. Higher Efficiency

    Ensures optimal use of resources by minimizing waste.

    Enhances performance through organized allocation and control of finances.

    3. Sense of Responsibility

    Assigns clear financial responsibilities to individuals or departments.

    Encourages accountability and better management of resources.

    4. Source of Motivation

    Serves as a target that individuals and teams strive to achieve.

    Encourages proactive efforts to meet or exceed budget goals.

    5. Coordination

    Aligns different departments and functions toward common organizational goals.


    Promotes teamwork by integrating various operational plans into a unified approach.

    You might also like