VA budget is a plan expressed in quantitative

usually monetary terms and covering a

specified period of time, usually one year.
Many companies refer to their annual budget
as a profit plan.
V Oudget is an aid in making and coordinating
short range plans.
V It is a benchmark for controlling ongoing
activities.
V Oudget is a basis for evaluating the
performance of the managers and employees.
V It motivates managers to achieve their goals.
V It helps to centralize budgetary control.
V It helps to decentralize responsibilities on to
each manager working in an organization.
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V Oudget is not an exact science and a certain
amount of judgment is always present.

V Itwill be ineffective in a situation like strikes ,

lockout and economic revision.

V Lacking of support from the top management

may lead to the collapse of plans.
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ë Long term budget :- It is prepared on the basis
of long term forecasts.

ë Short term budget :- It is prepared on the

basis of short term forecasts
i.e. for a period of one to five years.

ë Current budget :- budget which are

prepared for a period of one month to
one year.
V Master Oudget :- It is one that projects the
activities of the business during the budget
period. It commonly takes the form of
budgeted profit & loss account and balance
sheet.

V Functionalbudget :- It forecasts for individual

department like, production budget , cash
budget, labor budget etcÔ
V FixedOudget :- It is prepared for a fixed or
standard volume of activity . It does not change
with the change in volume of activity.

V Flexible
Oudget :- It is designed to change in
accordance with the level of activity attainedÔ
V ïperating Oudget :- This budget deals with the
plans for routine activities like sales ,
production etc.

V Capital Expenditure Oudget :- All budgets that

are related to the plans aiming at creating
manufacturing facilities are known as capital
expenditure budgetÔ