What Is Budget And Why It Is Important To Budget?

Budget is the plan in which an organization forecasts its future revenues and expenses and allocates the resources accordingly. The process of making budget is known as budgeting. A budget is also known as a plan for saving and spending. Budget is considered very important for any organization because it provides the forecasts to the companies. On the basis of these forecasts, the companies can make strategic decisions like diversification decisions or other investment decisions. Budget also helps the organization to determine the actual performance against the desired and measured performance. The companies also try to balance their sources and uses of funds through budgeting therefore, budget enhances the financial control of a company.