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What is budget?

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Budget is an estimate of costs, revenues, and resources over a specified period, reflecting a reading of future financial conditions and goals. One of the most important administrative tools, a budget serves also as a plan of action for achieving quantified objectives, standard for measuring performance, and device for coping with foreseeable adverse situations. A budget is really just a plan for how to spend money.

Why organisations need a budget?

Budgeting is important in an organisation because it helps in setting standards of performance, it plays a critical role in strategic planning and it provides a tool to measure organisation results. Budgeting is usually the responsibility of the finance department. Cash budgeting allows business leaders to see their upcoming debt obligations to ensure that they have the cash they need to meet them. By listing upcoming expenditures as debits. They need to have a budget because they have to know how much money will be needed on the plan. Sample and steps for an Organisational Budget:

Keep track of everything you spend for a month or more.
Group these into categories that make sense to you, like food, rent, car expenses, etc. Try to think of expenses that you have that you don’t pay for on a monthly basis, like car insurance or medical insurance. Try to estimate them for a year and then divide them by 12 to get a monthly estimate Write the categories for both the regular and irregular expenses with the estimated amounts on a piece of paper or put them into a computer spreadsheet Total them up

Compare the total to how much money you make in a month
Try to find ways to cut down on your spending
Give examples of how organisations would budget.
Devise and implement a budget

Defines and explain financial planning
Explain why organisations/business needs effective financial planning Explain why organisations/ business need effective financial planning Explain why financial plan need to be regularly reviewed in view of available

Read more: http://www.businessdictionary.com/definition/budget.html#ixzz2x4SQ2DNn

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