Budgets

Question 1

What is a budget

Answer 1

A budget is a quantitative statement, for a defined period of time, which may include planned revenues, expenses, and capital expenditure.

Capital expenditure is money invested by a company to acquire or upgrade fixed, physical or non-consumable assets e.g. buildings, machinery etc.

Question 2

Main purpose of budgeting

Answer 2

It allows a business to plan out expenses, reach business goals and anticipate any operational changes as needed to support the business.

A budget helps a business understand its operating costs and can be used to track performance.

Types of budget used by businesses include:

• Sales revenue budgets
• Expenditure budgets
• Profit budgets