ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -It involves reviewing past budgets, identifying and forecasting revenue for the coming period, and assigning amounts to spend on a company’s various costs. When done well, the process involves input from senior management, your finance team, and budget managers across the organization.

Detailed explanation-2: -Creating a budget is an important pillar of your overall success and security. It allows you to oversee and better understand whether your business has enough revenue (incoming money) to pay its expenses. Using a budget can help you make more informed financial decisions.

Detailed explanation-3: -The purpose of budgeting is to provide a financial framework for the decision making process i.e. is the proposed course action something we have planned for or not. In managing a business responsibly, expenditure must be tightly controlled.

Detailed explanation-4: -Budgets are necessary to highlight the financial implications of plans, to define the resources required to achieve these plans and to provide a means of measuring, viewing and controlling the obtained results, in comparison with the plans.