What is a Budget?
A budget is a financial plan for the future, laid out in dollar amounts.
How it Works
A business needs to plan for the future..
To do this, they lay down a series of detailed budgets.
A sales budget lays out sales projections for the coming period or periods.
Expenses /Selling and Marketing Budget
Expenses and selling and marketing budgets lay out details of expected expenses involved with operating and promoting the business.
Capital Expenditure Budget (CapEx)
A capital expenditure budget shows how much the business plans to invest in physical assets such as buildings, infrastructure, or equipment in the coming period or periods.
Cash Flow Budget
A business will continually receive and expend cash.
A cash flow budget lays out expected cash receipts and cash expenditures in the coming period or periods.
Sometimes, the business expects to receive more than it pays out.
At other times, it will pay out more than it receives.
A master budget is made up from information provided by all other budgets.
A budgeted income statement will project the business’s likely income and expenditure.
While a budgeted balance sheet will show projections for assets and liabilities.