Budgeting Flashcards

Flashcards about Budgeting and Variance Analysis.

Budget

A financial plan that forecasts revenue from sales and expected costs over a time period.

Cash Flow Forecast

Shows the movement of cash in and out of a business over a time period.

Variance Analysis

Shows the comparison between the Budgeted figure and the Actual figure achieved.

Budgets

Financial targets for the future covering revenue (income) and expenditure (outgoings) over a certain time period

Expenditure budget

A fixed sum of money to be spent in a given time period by a department or business.

Budget holder

A person who is accountable for seeing that a budget is kept to.

Income budget

The sales revenue target for a department or the whole business.

Delegated budget

Giving some control in the setting and spending of budgets to departments or individuals.

Profit budget

The target profit for the business over a given time period – this is created by combining the Expenditure and Income budgets.

Monitoring budgets

Keeping a check on progress towards achieving targets during the budget period.

Income Budget

Revenue budgets

Expenditure Budgets

Cost Budgets that set spending limits for a business and separate departments or individuals within a business (budget holders).

Profit Budget

Provide clear goals and targets that motivate people to perform well but also allow monitoring of performance against actual profits made and combination of the Income and Expenditure Budgets.

Favourable Variance

When the Actual figure is better than the Budgeted figure.

Adverse Variance

When the Actual figure is worse than the Budgeted figure.