Question

What is budgeting and why is it important? What are the possible effects if expenses exceed the revenues

Answer 1

Budgeting means a quantitative plan which is used as a tool for deciding the future actions and plans. It is the process of calculating how much money one must earn or save to meet the expected expenses.

It is important since a financial plan assists in deciding what activities must be undertaken to meet the expectations of future and for achieving the organisational goals. It helps in controlling the expenses and raising the revenue as per the enterprises requirements.

If expenses exceed revenues the organisational profit objectives will not be achieved and the cost of debts will not be met to the fullest. the expansion prgrams will also be impacted.