Types of budget and budget cycle

TYPES OF BUDGET

1- MASTER BUDGET – A master budget is a comprehensive projection of how management expects to conduct all aspects of business over the budget period, usually a fiscal year. Most master budgets include interrelated budgets from the various departments. Managers typically use these subset budgets to plan and set performance objectives. Master budgets are generally used in larger businesses to keep many managers on the same page.

2- OPERATIONAL BUDGET– The operational budget covers revenues and expenses surrounding the day-to-day core business of a company. operating budgets are usually broken down into smaller reporting periods, such as weekly or monthly.

3- CASH FLOW BUDGET– A cash flow budget examines the inflows and outflows of cash in a business on a day-to-day basis. It predicts a company’s ability to take in more money than it pays out. Managers monitor cash flow budgets to pinpoint shortfalls between expenses and sales.

4- SALES BUDGET-  an estimate of future sales, often broken down into both units and currency. It is used to create company sales goals.

5- REVENUE BUDGET– consists of revenue receipts of government and the expenditure met from these revenues. Tax revenues are made up of taxes and other duties that the government levies.

6- FLEXIBLE BUDGET– Flexible budgets are, as their names suggest variable and flexible depending on the variability in the results expected in the future. Such budgets are most useful for businesses that operate in an ever changing business environment, and have the need to prepare budgets that are able to reflect the many outcomes that are possible.

7– FIXED BUDGET– Fixed budgets are used in situations where the future income and expenditure can be known, with a higher degree of certainty, and have been quite predictable over time.

Types of Budget
Types of Budget

BUDGET CYCLE

The budget cycle refers to the life of a budget from creation to evaluation. it consist of four phases.

1- Preparing the Budget

2- Approving the Budget

3- Executing the Budget

4- Evaluating the Budget

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