Operating and

Financial Budgeting
Budgeting (Review)

A budget is a financial plan of the resources needed to carry out tasks

and meet financial goals. The act of preparing a budget is called
BUDGETING.

Types of Budget:
1.) The Operating budget
2.) The Financial budget
3.) The Capital Budget
Operating Budget
 It refers to the plans for the conduct of business for the planning period; it
includes the budgeted income statement and all its supporting budgets.

1. A Budgeted Income Statement refers to the projection of revenue, expenses ,

and results of operations for a definite period of time.
a. Sales Budget - shows the quantity of each product and the revenue expected to be
sold.
b. Production Budget – production plan of resources needed to meet current sales
demand and ensure adequate inventory levels (Materials cost, Direct Labor costs and
Factory overhead budgets and Inventory levels.)
Financial Budget

 This refers to the budget of the financial resources as reflected in the

budgeted statement of financial position and cash budget
classified by source.

1. Budgeted Statement of Financial position.

2. Cash Budget is a period-by-period statement of cash at the start
of a budget period, expected cash receipts