A financial plan that estimates income and expenses over a specific future period, used to guide spending and resource allocation.
A budget is a forward-looking financial plan that sets revenue targets and expense limits. Businesses use budgets for planning, controlling costs, evaluating performance (budget vs actual analysis), and securing funding. Types include operating budgets (revenue and expenses), capital budgets (asset investments), cash flow budgets (liquidity planning), and master budgets (comprehensive company-wide plan). Zero-based budgeting starts from scratch each period, while incremental budgeting adjusts the previous period's numbers.
A company's Q1 marketing budget allocates: Digital Ads ₹3,00,000, Content ₹1,50,000, Events ₹2,00,000, Total ₹6,50,000. Actual spend was ₹7,10,000 — an unfavorable variance of ₹60,000 (9.2% over budget).
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Monthly at minimum, with quarterly deep-dive reviews. Modern ERP systems provide real-time budget vs actual dashboards so you can track variances as they happen, not months later.
A method where every expense must be justified from scratch each period — nothing is carried forward automatically. Unlike traditional budgeting (adjusting last year's numbers), ZBB forces managers to evaluate if each cost is still necessary.
The net amount of cash and cash equivalents moving into and out of a business during a specific period.
A financial statement that summarizes a company's revenues, costs, and expenses over a specific period to show net profit or loss.
The point at which a business's total revenue equals total costs, resulting in neither profit nor loss.
The accounting principle that determines when and how revenue is recorded in the financial statements, based on when it is earned rather than when cash is received.
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