Subject Name: Cost and Management Accounting
Created by : Muskan (2202390049)
Rishika (2202390004)
Mohit(2202390005)
Dimple (2202390039)
TOPIC : DIFFERENT TYPES
OF BUDGET
Understanding the Types of Budgets in Accounting
A budget in accounting can help a business or individual
save money by sticking to strict spending rules.The key to
making a budget work is learning to understand the
numbers and sticking to the budget throughout the year .
Why is it important to budget in accounting?
Creating a budget for business expenses helps track costs and income in a
more organized way .It can benefit businesses of all sizes, and most
businesses utilize it to keep finances organized and make tax filings
simpler.
For example, a business that's looking to expand its workforce and add an
entirely new department might need a master budget that includes an
operation and labour budget. Master budgets encompass all the more
focused budgets in a business for the sake of providing a "big picture"
look at a company's expenses.
Types of budget in accounting
Basic budget
A basic budget is to map out simple expenses and income. A basic budget
can be created in a spreadsheet or using a template, and is great for home
or business budgeting.
Short-term budget
A short-term budget is designed to help a business or individual plan for
short-term expenses and manage funds in a shorter time span. This can be
anywhere from a week to a few months.
Fixed budget
A fixed budget is used to control costs when income and expenses aren't expected to
change in the short-term.
Cash budget
A cash budget is used to plan for cash inflow and outflow for a specific period of time,
usually in the short-term.
Flexible budget
A flexible budget is used to plan for different levels of activity in expenses or incomes in
the short or long-term.
Functional or operation budget
An operation or functional budget applies to one specific operation of a business
and is part of the master budget.
Master budget
The master budget is used to encompass smaller operation budgets and provide a
larger picture of individual expenses and incomes.
Performance budget
It is designed to analyse the performance of a specific aspect of a business and
determine whether the cost is worth the output.
Static budget
A static budget is used to account for static expenses that won't change.
Labour budget
Tracking the cost of labour in relation to revenue.
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