A budget is an operational plan for a defined period, usually a year, that outlines expected income and expenses. It should focus on the organization's objectives and policies to ensure resources are used effectively. Developing a budget requires coordinating departments, setting realistic targets, and reviewing performance to aid in managerial decision making and evaluate performance. Flexibility must be built into the budget to account for changes.

1. Prepared by,
Mrs. Rijo Lijo.

2.  Budget is an operational plan for a definite period,
usually a year, expressed in financial terms and based
on expected income and expenditure.
 1. Budget should provide sound financial management
by focusing on requirement of the organization
 2. Budget should focus on objectives and policies of
the organization. It must flow from objectives and give
realistic expression to the way of realizing such
objectives.

3.  3. Budget should ensure the most effective use of
scarce financial and non financial resources.
 4. Budget requires that programme activities planned
in advance
 5. Budgetary process requires consistent delegation for
which fixed duties and responsibilities are required to
be allocated to managers at different level for framing
and executing budget.

4.  6. Budgeting should include coordinating efforts of
various departments establishing frame of reference
for managerial decisions, and providing a criterion for
evaluating managerial performance.
 7. Setting budget target requires an adequate checks
and balance against the adoption of too high or too
low estimate. Utmost care is a must for fixing targets.
 8. Budget period must be appropriate to the nature of
business or service and to the type of budget.

5.  9. Budget is prepared under the direction and supervision
of the administrator or finance officer.
 10. Budget is to be prepared and interpreted consistently
throughout the organization in the communication of
planning process.
 11. Budget necessitates a review of the performance of the
previous year and an evaluation of its adequacy both in
quantity and quality.
 12. While developing a budget, the provision should be
made for its flexibility.