Annual Budget

Introduction, Meaning, Elements, Objectives

Introduction:

A annual budget lays out a company’s,

governments, projected income and expenses
for a 12 months period.
The process of creating an annual
budget involves balancing out a business
sources of income against its expenses. Annual
budget are considered to be balanced if
projected expenditure are equal to projected
revenue.
Annual budgets are planned by individuals,
companies, governments and other type of entities
that have to keep track of financial transaction.
The budget can be laid out for a calendar
year or for a financial year. The budget must be
planned such that they realise the financial goals
Meaning:
Annual budget is a plan for an
organization or company’s expenditures for a
fiscal year. Making an annual budget involves
balancing an organization’s revenue or income
with its expenses.
Elements of budget:
There are two main elements of the
governments budget. They are as follows
• Budgets receipts: It refers to the estimated
receipts of the governments from all the
sources during a fiscal year. It is two types
A. Capital receipts
B. Revenue receipts
• Budgets expenditure: It refers to the
estimated expenditure of the government on
various developmental as well as non
developmental programs during a fiscal year. It
is of two types
A. Capital expenditure
B. Revenue expenditure
Objectives
• Reallocation of resources : It helps to
distribute resources, keeping in view the social
and economic advantages of the country.
• Economic growth: Another purpose of the
government budget today is to study the
generation of savings, investment,
consumption to access the trend of growth in
the economy to improve the standard of living
of the people.
• Redistribution of income and wealth: It is one
of the most important objective of the
government budget. The government impose
heavy taxation on a high income groups
redistribute it among the people of weaker
section in the society.
• Economic stability : The government of the
country is always committed to save the
economy of business cycles. Government
budget is a tool to prevent economy from
inflation or deflation and to maintain
economic stability