A plan that formalizes the overall goals and objectives of a company in financial terms is called a master budget.
This refers to the proposed revenue to be earned and expenses to be incurred by an organization in the coming year. The goals of a budget is to have an overview of expected cost or to even attain certain goals.
A company may budget it's expenses for an entire year and after the budget period look back towards seeing how well they performed as regards keeping to their budget hence helps in Performance monitoring.
Budgets can be categorized into:
It is important to note that budget allows one to oversee and better understand whether a business or company has enough revenue to cover its expenses.
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