Session 40 - budgets Flashcards
What is a budget
A target for predicted costs or revenue that a business or department must aim to reach over a given time period
When is budgeting useful
Large organisations
Why allocate a budget to a department
To monitor spending
What is variance analysis
The difference between budgeting and actual outcomes
What is an adverse variance
Where the outcome has cost the business money
How can budgets act as a motivational tool
Because they incentivise by providing a benchmark for the organisation to achieve
What is the process of budgeting
Planning, forecasting, communication, motivation
What are the types of budgets
Income, expenditure, profit, historical, zero
What are income budgets
Refers to money expected from sales to customers
What are expenditure budgets
Refers to costs and shows the agreed, planned expenditure of the business
What are profit budgets
Shows agreed, planned profit of a business over e period of time
