2. BUDGET:
The planning of spending and saving money from the income about to earn in near
future and/or the planning of expenditures for keeping them under the shade of
revenues comes under budgeting based on defined period which describes if the
spending in budget is less than income, it means the estimation is under budget and
if the total income is below than expenditure, it indicates the need of reduction in
expenditures immediately otherwise debt will increase to fill the gap or will have
to increase the sourceof income.
A good monthly budget ensures helps in overcoming unexpected emergencies and
in reaching financial goals in comparison to revenues and expenses or may include
assets and liabilities.
We may say that budget is the name of cash inflow and cash outflow rounding in
assets, liabilities, proprietorship, revenue and expenses.
In order to create your monthly budget, you may follow the simple stapes as in
picture I;
Your monthly income includes salary, investment, interest and other sources
The budget includes total income which may be from salary, investment, interest
and other sources provide finances to expenditures and to debt payment.
The expenditure will have two segments as flexible expenses and fixed expenses.
The flexible expenses are not of permanent nature like hospitality, entertainment,
repairs, clothing, incidentals etc. and fixed assets are the expenses which are
necessary to pay for housing, grocery, utilities, transportation, health and others.
The total expenditures flexible, non flexible and debt are paid by monthly income
and the balance remain unpaid may be saved or invest.
3.
4. The picture 2 is showing budget of a business doing trading;
5. Besides whole budget of individual or company, we can make budget partially; sales budget in
value and in unit, expenses budget wholly or departmentally as in picture 3
7. Actually, the plan of spending from the sources of income and saving
something from income and spending may call budget either written or
kept in mind because nobody wants to go in debt because of this it is
said that cut your coat according to your cloth.
In these busiest days, the most of individuals and business men think the
budget is useless, waste of time, waste of paper and waste of labour and
do work according to cash flow but the concept of budget; spending
against revenues is in its place.
The estimation values shown in budget may be journalized to keep in
control the budget under accrual system and/or on meeting the purpose,
the estimation values can be reversed to keep them in actual position.
The budget is based on estimation values based on spending against
sources of income.
WRITER’S VIEW
