Question

Explain the term ‘budget’.

Explain the following term with suitable examples:

Budget

Explain the following concept:

Budget

Answer 1

A budget estimates revenue and expenses for a future period and is evaluated periodically. A surplus budget predicts profits, whereas a balanced budget expects revenues to equal expenses. A deficit budget indicates that spending will exceed revenues.

Answer 2

A budget is a plan that outlines the anticipated outcomes of a specific future time frame in numerical terms. It is a blueprint or course of action intended to accomplish a particular objective. It can be stated in terms of money, time, or tangible units. It is a forecast outlining the expected expenses, outcomes, and resource distribution. A budget may include cash flows, production and sales goals, and capital expenditures. 

Example: A sales budget may estimate that a company will sell 10,000 units of its product at ₹ 100 each in the next quarter, targeting ₹ 10,00,000 in revenue. Based on this, production, marketing, and procurement plans are aligned.