BUDGETING English meaning

definition of budget by different authors

A factor does not remain a principal budget factor for all times. A principal budget factor today may not be the budget factor tomorrow; or, a key factor in the short run may not be a key factor in the long run. Budget calendar, specifying the dates on which different functional budgets and reports are to be submitted to the budget committee for review and approval. Usually, the chief executive is the head of this committee, so that decisions of this committee become binding on others.

How do scholars define budget?

A budget is: 'A quantitative expression of a plan for a defined period of time. It may include planned sales volumes and revenues, resource quantities, costs and expenses, assets, liabilities and cash flows.

When you’ve been faithful to your budget for a month, give yourself a reward. Even small ones can help, such as a night out with friends, a concert or a little extra cash for spending. If you simply increase your income without a budget to handle the extra cash properly, the gains tend to slip through the cracks and vanish. Once you have your budget in place and have more money coming in than going out , you can start investing to create more income. If you’re still not convinced that budgeting is for you, here’s a way to protect yourself from your own spending habits.

Difference Between Cash Budget and Cash Flow Statement

If you are paying off debt, such as student loans or a credit card bill, find the minimum payment for each debt. The specifics of your budget will depend on your personal financial situation and goals. In most cases, though, the steps for creating a budget are the same.

  • Moreover, it also invested in new recycling technologies and improved its packaging materials.
  • It is a prediction of probable events which are likely to occur as a result of a given set of circumstances during a specified period of time.
  • Adding to your debt load, on the other hand, will mean that your future could be even tighter.
  • The concept of performance budgeting is used mainly in the Government and public sector undertakings.
  • Budget is prepared for a specified period of time, usually for a year.

The budget preparation starts with defining the objectives the organization wishes to achieve. It can be cost savings, exploiting new market segments, or launching new products/services. Bills and living expenses can often be the main focus of a budget as they consist of the primary expenses that individuals experience. Some financial planners do not separate bills from expenses, however for the purpose of this article they have been separated.

What’s the purpose of a budget?

In fact, it should change as your circumstances change — when you get a raise, for example, or become a homeowner. The idea is to make your budget as personalized as possible, leaving room to adapt. Budgeting isn’t about depriving yourself; it’s about taking control of your money. There’s no correct way to budget — what works for one person might not work for another.

definition of budget by different authors

Rolling budget approach – budget is adjusted monthly, and a new month is added as each month passes. The federal budget started small, as our government was small, and provided only a rather nominal level of services, such as mail delivery and a limited national defense. However, the 16th Amendment authorized a national income tax in 1913, which allowed the federal government to tap a new revenue source and expand the services it provided to its citizens. A rolling budget is not advisable for those organizations where conditions are not changing frequently. The rolling budget creates confusion and disturbs employees because of constant changes. Direct material and direct labor are thevariable costs directly related to the production of finished goods.

Corporate Budgets

It ensures more careful planning and optimum allocation of resources as all activities included in the budget are justified on cost – benefit considerations. Under-zero base budgeting, corporate objectives are defined. Under the activities of zero-base budgeting, scope of organisations is determined.

The production budget, in turn, is used to determine the budgets for manufacturing costs including the direct materials budget, the direct labor budget, and the manufacturing overhead budget. The business may also need to consider its plans for property plant and equipment (often called “capital assets” or “capital expenditure”, sometimes shortened to “capex”). It may take time to save cash to spend on capex, or the business may need to apply for loan. The cash budget will also assist management in helping them determine whether they will have sufficient cash to repay such loans. There are various strategies companies use in adjusting the budget amounts and planning for the future. For example, budgets can be derived from a top-down approach or from a bottom-up approach.

The figure below lays out how operating budgets and financial budgets are related within a master budget. A rolling budget is flexible as one can change the financial period. In contrast, in a flexible budget, the characteristics are limited to the current period. It is a very costly affair because it requires additional staffing to regularly update the rolling budget and analyze the actual performance vs. the budget.

definition of budget by different authors

For example, when sales potential is limited, sales become the key factor. Hence, sales budget should be prepared first and the production and other budgets will follow it. Sometimes more than one factor may limit the activity level.

Current Budget

Set up an automatic transfer from your checking account to a savings account you won’t see (i.e., at a different bank), scheduled to happen right after you get paid. If you don’t have any major savings goals (upsizing your living situation, starting your own business, etc.), it’s hard to drum up the motivation to stash away extra cash definition of budget by different authors each month. However, your situation and your attitudes likely will change over time. Unless you’re on a very tight budget, you should be able to buy baseball tickets and go out to eat. Tracking your expenses does not change the amount of money you have available to spend every month; it just tells you where that money is going.

What is budget according to different authors?

Terry, “A budget is an estimate of future needs arranged according to an orderly basis, covering some or all of the activities of an enterprise for a definite period of time”.

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