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What are the different types of budgets?
Budget Types
Q: What are they and how do they work?.
Any thoughts?.
65 months ago
6 answers
Operating budget. Analysis and forecast of income and expenses. These could be performed on a monthly, quarterly, yearly basis.
Financial budget. Evaluate the status of a company, is it healthy or not? You need it to manager the assets and the cash flow.
Static budget. It does not change as volume change. E.g. The budget for sale commission could be the same, no matter the amount of sales. In contrast you could have a flexible budget expresses for example in % of sales.
Cash flow budget. A real time update on company expenditures. Is the company managing cash in the right way?
Master budget. Consolidation of all the budget of a company, per brands, departments, etc. You have the global picture of its health.
Good thoughts:
Succinctly, [fixed, variable and hybrid; cost plus [+] and cost minus [-] and zero-based] with P&L stewardship accountability.
65 months ago
"Annual income twenty pounds, annual expenditure nineteen pounds nineteen shillings and six pence, result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery."
Can't put it better than Mr Micawber in Charles Dickens' David Copperfield
Out of different budgets Master Budget, Operating Budget, Cash flow budget and financial Budget are preference.
Master budget of a company designed to present a complete picture of its financial activity like sales, operating expenses, assets and income streams.
But operating Budget is analysis of projected income and expenses of a specified time period to create an accurate picture of account like production, labor costs, materials costs, overhead, manufacturing costs, and administrative expenses.
Whereas cash flow budget is a means of projecting how and when cash comes in and flows
Out of a business within a specified time period.
In case Financial Budget of a company it makes strategy for managing its assets, cash flow,
income,and expenses which is used to establish complete financial picture of company.
63 months ago
Budgets help businesses track and manage their resources. Businesses use a variety of budgets to measure their spending and develop effective strategies for maximizing their assets and revenues. The following types of budgets are commonly used by businesses:
1.Master Budget
2.Operating Budget
3.Cash Flow Budget
4.Financial Budget
5.Static Budget
63 months ago