Budgeting has different types and each type serves a different purpose. Participative budgeting is therefore one such type of budgeting approach. It is quite evident from the name that participative budgeting is an inclusive approach that involves the contribution of staff from every level of the hierarchy to prepare the budget. A small team usually …

What is Participative Budgeting? (Definition, Example, and Importance) Read More »

Budgeting is one of the most important concepts in modern business and economic activity and the backbone of all scales of financial management. Its importance is portrayed in the sheer aspects of the application budgeting has in ranging from countries, blocs, mega-empires to an individual’s needs. Budgeting is the process through which plans are created …

Participatory Budgeting vs Traditional Budgeting: Which is Better? Read More »

Budgeting is the foundation projects are built upon, budgets are the limiting factor because the amount of finance that is available for a project will then determine how that project is created, how many resources both human and capital are employed, and how that project is executed. A project cannot begin before a detailed budget …

Budgeting in Project Management: Methods, and How to Estimate a Project Budget? Read More »

Budgetary slack refers to the practice of under or overestimating the revenue or expenditure in order to create a financial cushion in order to increase the likelihood of achieving budget and performance targets and therefore make the actual performance look better than it actually is. Budgetary slack can be considered as a practice associated with …

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A budget estimates the income and expenditure for any activity or project. Budgets are drawn up with some future aim or objective in mind. For instance, governments create annual budgets and these formal documents contain itemized details of the revenue and expenditure targets for the government. Similarly, corporations prepare their many different budgets. The sales …

What is a Budget Control? Concept, Purpose, and Importance Read More »

Zero-based budgeting is an approach used by the company’s management to prepare a budget by taking the base as zero. Unlike other techniques that are used for the formulation of the budget, this technique does not use the previous year as a base year. It is a process used to control the organization’s unnecessary costs. …

Zero Based Budgeting: Key Elements and 5 Steps To Implement It Read More »

Zero Based Budgeting              Before discussing the advantages and disadvantages of Zero Based Budgeting, let’s have an idea of what this budgeting approach is all about and how it differs from traditional budgeting.  Zero Based budgeting approach is different from traditional budgeting in a way that the latter normally forecasts the amounts for the current year …

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Introduction There is no doubt to the fact that budgets tend to be increasingly important in order to ensure that businesses continue to operate efficiently and effectively. It helps them to maintain their productivity and eventually their profitability over the course of time. There are numerous types of budgets that are used by companies over …

What is an Operating Budget? Definition, Components, Advantages, And Limitations Read More »

Introduction A master Budget can be defined as the budget of all budgets. It comprises the budget of all the relevant departments and functions within an organization. It is the sum of the four divisional budgets that are prepared by the respective divisions. It also includes financial planning, cash-flow forecasts, as well as budgeted profit …

What is a Master Budget? Steps in Preparation, Advantages, and Limitation Read More »

Businesses prepare budgets for financial forecasts and performance evaluations. The Budget serves many purposes to any business including; Planning, Control, Performance measurement, motivation, and communication. Depending on the purpose and nature of the budget, it can be classified into different categories. Management can take different approaches to the budget process. By nature or characteristics budgets …

7 TYPES OF BUDGETS: DETAIL EXPLANATION Read More »