What are the different types of budgets?

There are different types of budgets such as personal, beginning, financial, operational and project. Distinguishing budgets by type is a little hollow exercise. The only real basis for differentiation is the way the budget is used in practical contexts.

The budget is a written list of expected expenditure balanced income for a period of time. This creates the basis of the financial plan, because the performance of comparison of expected expenses for expenditure allows the person to make modifications if the end of the period seems to result in a deficit of funds. Budgets also allow financial management. At the end of the period, the budget can be compared with a financial record that analyzes what happened to cause any mismatch between the planned scenario and what actually happened.

One of the more common types of budgets is a personal budget. This type of budget uses an individual to manage his own finances or finance of his household. States all expected sources Income in one part and expected expenditureis cash for expenditure in another, usually according to the month or during the year. Expenditure will be deducted from income to determine whether a person excess expenses. Categorization of cash expenses can also be used for planning purposes to determine how much excess cash is available for savings or which category of expenditure can be reduced to achieve savings.

other types of budgets are typical in business environments. New businesses are preparing initial budgets to help determine capital needs and secure financing. The initial budget will include the same comparison of the expected income against expenditure, but it could give the best case, the worst case and the scenario of the middle case. Mature businesses create an annual operating budget that assumes cash flow and serves as a tool of financial control for employees who have a function of functional expenditure over a particular budget line such asCount line for supplies.

larger companies usually produce a budget for each department and then compose all budgets for the departments into the main budget. These types of budgets can cover the whole fiscal year, but are regularly checked like every quarter, and budget adjustments are performed to suit changing circumstances. At the end of the year, various departments are evaluated on the basis of the management's ability to function according to the budget.