Introduction of the term Budget

Question

Give a brief introduction of the term Budget and also write down its characteristics?

Answer 1

A budget is a financial document or an act plan which is made and employed to project prospect expenses and income. It outlines an organization’s operational and financial goals. It can also consist of non- monetary information with the monetary information. They need to be prepared and approved in advance of the year in that they are to be employed or implemented.

The characteristics of a good budget are illustrated below:

- It is stated in monetary or quantitative terms.
- It is made for a fixed period of time it is made before the period in that it commences.
- Practical to put into practice.
- It makes obvious the objects and the policies to be followed in sequence to attain the objective of the organization.
- A lot of people are involved in drawing up a budget.
- Flexible enough to permit alters in the changing surroundings.
- made on the base of established standards of performance.
- Examine the cost and revenues.
- On the base of budget report performance of the organization is continually monitored.