Budget
From Wikipedia, the free encyclopedia
Budget (from French bougette) generally refers to a list of all planned expenses and revenues. A budget is an important concept in microeconomics, which uses a budget line to illustrate the trade-offs between two or more goods.
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[edit] Personal or family budget
- For more details on this topic, see Personal budgeting methods and tools.
In a personal or family budget all sources of income (inflows) are identified and expenses (outflows) are planned with the intent of matching outflows to inflows (making ends meet).
[edit] Government budget
- For more details on this topic, see Government budget.
The budget of a government is a summary or plan of the intended revenues and expenditures of that government. In the United States, the federal budget is prepared by the Office of Management and Budget, and submitted to Congress for consideration. Invariably, Congress makes many and substantial changes. Nearly all American states are required to have balanced budgets, but the federal government is allowed to run deficits.
In the UK the budget is prepared by the Chancellor of the Exchequer, the second most important member of the government, and must be passed by Parliament. Parliament seldom makes changes to the budget.
[edit] Union Budget in India
In India, the Finance Minister prepares the Union (Federal) Budget and presents it to the Lok Sabha, the House of the Indian People(s) on the last day of February. It has to be approved by Parliament before April 1, the start of India's financial year. The day the Union Budget is presented is considered by many observers to be the most important of India's political calendar. It usually has an immediate effect on the nation's stock exchanges and also has possible short term political implications. This is in addition to the long term changes that some budgets may lead to, for e.g. Manmohan Singh's budgets in the early 90's.
[edit] Corporate budget
The budget of a company is compiled annually. A finished budget usually requires considerable effort and can be seen as a financial plan for the new financial year. While traditionally the Finance department compiles the company's budget, modern software allows hundreds or even thousands of people in the various departments (operations, human resources, IT etc) to contribute their expected revenues and expenses to the final budget.
If the actual numbers delivered through the financial year turn out to be close to the budget, this will demonstrate that the company understands their business and has been successfully driving it in the direction they had planned. On the other hand, if the actuals diverge wildly from the budget, this sends out an 'out of control' signal and the share price could suffer as a result.
