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    Types of budgets and which type is the most important

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    What are the types of budgets and which type is the most important?

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    What are the types of budgets and which type is the most important?

    A budget is detailed plan outlining the acquisition and use of financial and other resources over some given time period. It is a plan for the future expressed in formal quantitative terms. The act of preparing budget is called budgeting. The use of budget to control firm's activities is called Budgetary control.

    Master Budget: The Master budget is a summary of all phases of a company's plans and goals for the future. It sets specific targets for sales, production, distribution and financing activities. It represents a comprehensive expression of management's plan for the future and how these plans are to be accomplished. The master budget is the comprehensive budget that included (1) The operating Budget. (2) The capital Expenditure Budget (3) The financial Budget.

    The components of the Operating Budget are as follows.

    (a) Sales or Revenue Budget
    (b) Purchase, Production or Inventory Budget.
    (c) Operating Expenses Budget
    (d) Budgeted Income Statement

    2 Capital Expenditure Budget

    3 Financial Budget:
    (a) Cash Budget
    (b) Budgeted Balance Sheet

    Operating Budget: The operating Budget sets the the expected revenues and Expenses - and thus operating income. The end result of operating budget is the budgeted Income statement. Operating budgets are set to cover a one year period.
    Components of Operating Budget:

    1 Sales Budget: A sales budget is a starting point in preparing master budget. All other items of master budget including production,purchases,inventories and expenses depend on it in some way. ...

    Solution Summary

    The expert determines the types of budgets. Which budgets were most important are determined.

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