What is Budget? What are the objectives of Budget?

A budget is a financial plan for a defined period, often one year. It may also include planned sales volumes and revenues, resource quantities, costs and expenses, assets, liabilities, and cash flows. It expresses strategic plans of business units, organizations, activities or events in measurable terms.

The objectives of a budget can be summarized as follows:

1. Planning: A budget provides a detailed plan of action for a business over a definite period of time. It helps in setting objectives and goals and ways to achieve them.

2. Coordination: It helps in coordinating different departments of the organization and aligning their goals towards the overall objectives of the organization.

3. Performance Evaluation: It serves as a benchmark or standard for evaluating the performance of different departments and individuals in the organization.

4. Efficiency: It helps in identifying inefficiencies in operations and finding ways to improve them.

5. Control: It provides a tool for management to monitor and control the operations of the organization. It helps in identifying variances and taking corrective actions.

6. Resource Allocation: It helps in optimal allocation of resources in line with the strategic objectives of the organization.

7. Forecasting: It helps in predicting the future performance of the organization based on past and present data.