ECONOMICS
BUDGETING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Budget can help motivate the staff.
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A budget is a financial plan.
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A forecast looks forward whereas budget looks back.
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Budget provides coordination and direction.
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Detailed explanation-1: -Key Differences between Budget vs Forecast Budget is a financial statement of expected revenues and expenses during the budgeted period prepared by management before the budgeted period starts. The forecast is the projection of financial trends and outcomes prepared on the basis of historical data.
Detailed explanation-2: -Typically a budget is created before a financial forecast. A budget reveals the shape or direction of a company’s finance, while the forecast tracks whether or not the company is meeting its financial goals as outlined in the budget.
Detailed explanation-3: -Forecasting is the process of analyzing historical trends in order to predict future business results based on your company’s most up-to-date actuals. Done over a compressed time frame, forecasting typically focuses on major expenses and revenue line items.
Detailed explanation-4: -A plan serves as the foundation, a budget guides how to allocate cash, and a forecast projects the financial future of the business. CFOs understand that each is a standalone piece of the company’s financial puzzle.