• Budgeting
  • Is planning for the future – next month, quarter, or year
• Budget
  • Is the plan of the future
• How to budget?

• You estimate/predict/Guess what would happen in the future.
• However, your estimation must be based on some definite criteria.

Types of Budget

Sales Budget – shows the predicted future sales
Purchases Budget – Shows the predicted purchases in the future
Labour Budget – Shows the employee requirement
Expense Budget – Shows the expenses of the future
Cash Budget – Future cash inflows and outflows
Budgeted Profit and Loss Statement
Budgeted Balance Sheet

• All budgets are linked. Changes in one will bring about changes in others.
• Be Flexible – Your budget should not be rigid. You can not be 100% certain of the future. You should be able to accommodate change in the budget if circumstance demand.
• Benefits
  • Provide incentives to employees to achieve targets
  • Motivate employees
  • Maintain costs
  • Helps in POLC – planning, organising, leading and controlling