Budgets allow a business to create a financial roadmap by setting goals and working to achieve those goals. A budget is an instrument of management used as an aid in the planning, programming and controlling of business activities. The purpose of budget includes forecasting the income and expenditure of business. By estimating the income and expenditure the budget aid in calculating the profitability of the business. It is considered as a tool for decision making and a mean to monitor business performance. An effective budget must be well planned, flexible, realistic and clearly communicated. Budgets have different functions like planning, facilitating communication and coordination across the organisation, allocation of resources, controlling profit and operations, evaluating performance and provide incentives. Some of the main objectives of budget are reallocation of resources, economic stability, economic growth and so on. It estimates revenue, plans expenditure and restricts unnecessary spending. It also assures that money is allocated to those things that support the strategic objectives of the business

Abhijith S

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