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Types of Budget

By: EconomyWatch Date: 30 June 2010

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Budget is a financial statement that coins down the expected revenue and expenditure of a particular fiscal year. There are different types of Budget that may be discussed in the following section:

Partial Budget: Partial Budget aims to make small changes in the financial condition of a corporation. The process of Partial Budgeting involves a comparison between the plus and minus effects occurring due to the implementation of the proposed changes on the net income.

Partial Budgets are in fact helpful while evaluating changes like:

Improving the capital condition
Expansion in the size of a company
Searching for alternative companies, where changes need to be introduced
Employment of a custom operation, and not a purchasing instrument
Variations in the methods of productions

Business Set Up Budget: A Business Set Up Budget deals with the financial expenses required during the establishment of a commercial firm or enterprise. The expenses in this case include the costing of the basic infrastructures. It is considered as one of the fundamental means of introducing, improving and maintaining a business house. Hence, it explicitly studies the inflow of cash in the form of income, and plans the expenses of the concerned organization, based on the available funds in hand. Since a Business Set Up Budget is only based on assessments of the expected income and expenditures, the predictions and calculations are subject to variations. Hence arises the requirement of reviewing the budgetary documents from time to time, to adjust the estimated facts and figures with the actual ones.

Government Budgets: are the summarized versions of the anticipated revenues and expenses of a government. Formulated by the executive and passed by the legislature as a legal document, Government Budgets focus on the distribution of wealth for economic as well as political and social purposes. Some areas covered by the budget include:

Exemption from personal income tax
Superannuating schemes
Estimating the status of the national exchequer, both during the last and coming fiscal years
Enhancing sectoral productivities

Corporate Budgets: formulate the annual fiscal agendas, plans and programs of a commercial organization. It works for putting forward the expected income and expenditure figures of a company, for the next financial year.

Corporate Budget

Government Budget

Business Set Up Budget

Partial Budgeting

Capital Budgeting

Performance Based Budgeting

Zero Based Budgeting

Incremental Budgeting