A budget is a financial plan that outlines expected income and expenses over a specific period, guiding the allocation of resources to meet organizational goals.
- It helps organizations estimate revenues, plan expenses, and set financial goals.
Features of Budget
- It helps in financial estimation to forecasts expected income, expenses, and resource requirements.
- It is prepared in advance and includes the future course of action.
- It is designed to align with specific business objectives and targets.
- Serves as a benchmark for monitoring financial performance.
Importance of Budget
- It helps in financial control by enabling tracking and control of expenses.
- Helps allocate resources effectively.
- Assists in planning and making informed financial decisions.
- It helps in risk management by identifying potential financial risks and establishes a cushion.