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Companies, governments, families and other organizations use it to express strategic plans of activities or events in measurable terms. A budget is the sum of money allocated for a particular purpose and the summary of intended expenditures along with proposals for how to meet them. It may include a budget surplus, providing money for use at a future time, or a deficit in which expenses exceed income. In other terms, a budget is an organizational plan stated in monetary terms. A budget helps in planning actual operations by forcing managers to consider how the conditions might change and what steps should be taken now, and by encouraging managers to consider problems before they arise.
It also helps to co-ordinate the activities of the organization by compelling managers to examine relationships between their own operation and those of other departments. Tools provide a forecast of revenues and expenditures, that is, construct a model of how a business might perform financially if certain strategies, events and plans are carried out. Tools enable the actual financial operation of the business to be measured against the forecast. If the actual figures delivered through the budget period come close to the budget, this suggests that the managers understand their business and have been successfully driving it in the intended direction. On the other hand, if the figures diverge wildly from the budget, this sends an ‘out of control’ signal, and the share price could suffer. Campaign planners incur two types of cost in any campaign: the first is the cost of human resource necessary to plan and execute the campaign. There are two basic approaches or philosophies, when it comes to budgeting.