Question

In this question you will describe the importance of a budget.

Describe the benefit to management of the prepared budget and what decisions will the budget assist management in making and why?

Answer 1

Budget is described as future planning of your spendings.

Importance of budget :

• Preparing a budget helps in maintaining a balance between income and expenses.
• Budgeting helps in comparing between the estimated and actual expenses.
• Budgeting helps in saving costs.
• It creates coordination and motivation.
• Budgeting helps in important decision makings.

Management will be benefited from the budget as the decision makings of management will become easy and future forecasting of the business can be done easily using budget.