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  • Classification of Budgets

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    Ben Mathews
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    This document discusses the classification and importance of budgets. It defines a budget as a financial plan for a defined period, often one year, that includes planned sales, resources, costs, expenses, assets, liabilities and cash flows. The key characteristics of an effective budget are that it is simple, flexible, synthesizes past, present and future information, and has the support of top management. Developing a budget is important for planning future actions, coordinating departments, guiding decision making, communicating, and identifying problems. The main steps in the budget process are collecting past data, assessing past failures, setting objectives, preparing expense reports, reviewing and modifying the budget, and presenting to management for approval.

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    CLASSIFICATION OF BUDGETS

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    This document discusses the classification and importance of budgets. It defines a budget as a financial plan for a defined period, often one year, that includes planned sales, resources, costs, expenses, assets, liabilities and cash flows. The key characteristics of an effective budget are that it is simple, flexible, synthesizes past, present and future information, and has the support of top management. Developing a budget is important for planning future actions, coordinating departments, guiding decision making, communicating, and identifying problems. The main steps in the budget process are collecting past data, assessing past failures, setting objectives, preparing expense reports, reviewing and modifying the budget, and presenting to management for approval.

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    © All Rights Reserved
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    43 views7 pages

    Classification of Budgets

    Uploaded by

    Ben Mathews
    This document discusses the classification and importance of budgets. It defines a budget as a financial plan for a defined period, often one year, that includes planned sales, resources, costs, expenses, assets, liabilities and cash flows. The key characteristics of an effective budget are that it is simple, flexible, synthesizes past, present and future information, and has the support of top management. Developing a budget is important for planning future actions, coordinating departments, guiding decision making, communicating, and identifying problems. The main steps in the budget process are collecting past data, assessing past failures, setting objectives, preparing expense reports, reviewing and modifying the budget, and presenting to management for approval.

    Copyright:

    © All Rights Reserved
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    of 7

    CLASSIFICATION OF BUDGETS

    1
    CLASSIFICATION OF BUDGET

    GROUP MEMEBERS
    Darshan Kumar
    Sampath P V
    Ancy Thomas
    Silpa P S
    Aishwarya Suresh

    2
    BUDGET AND BUDGETING
    • A budget is used to forecast the financial results and
    financial position of an entity for a future period.
    • 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.
    • Budgeting is the process of creating a plan to spend
    your money. Budgeting is simply balancing your
    expenses with your income.

    3
    DEFINITION
    • According to TN CHABBRA “ a budget is an
    estimation of future needs arranged according to
    orderly basis covering some or all activities of an
    enterprise for a definite period of time”

    • According to DIMOCK “budget is a balance


    estimated expenditure and receipts for a given period
    time. In the hands of the administrator the budget is
    the record of the past performance , a method of
    current control and projection of future pans.

    4
    CHARACTERISTICS
    • Budget should be simple.
    • It should be flexible. It should be adjust various needs
    and conditions of the institution.
    • It should be synthesis of past , present and future.
    • Budget is composed of two segments that are income
    and expenditure.
    • Budget is forward planning.
    • It should have support of top management
    throughout the period of its planning and
    supplementation.

    5
    IMPORTANCE OF BUDGET
    • Planning future course of action
    • Coordinating cooperating of various department
    • Serves as a guide of action
    • Helps in decision making
    • Tool for communication
    • Provides feedback
    • Identify problem area

    6
    STEPS IN BUDGET PROCESS
    Step 1: Collecting of past data
    Step 2:Assess unsuccessful and failures of past
    Step 3:Setting objectives for forecast year
    Step 4:Objectives arranged in terms of indicated terms
    Step 5:Preparation on reports on expenses
    Step 6:Review of budget report
    Step 7:Evaluation for modification changes
    Step 8:Final presentation before board of trustees for
    decisions
    7

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