What is Budget?
A budget is an approximation of revenue and expenses over a defined future time frame; it is organized and reconceptualized on a periodic basis. Budgets can be outlined for a person, a family, a group of people, an entity, a country, a multinational organization, a government or just anything else that makes and spends money. At institutions and organizations, budget is an internal mechanism inculcated by the management and is often not required for reporting by external parties.
Budget is classified into 3 parts and they are:
- Balanced Budget
- Surplus Budget
- Deficit Budget
What is Balanced Budget?
A balanced budget is a condition in financial planning or the budgeting procedure where total revenues are equivalent to or greater than the total expenditure. A budget can be contemplated balanced in experience after a complete year’s account of revenues and expenses have been recorded. A company’s budget for the upcoming year can be called balanced based on anticipations or approximate values.
What is Surplus Budget?
A surplus budget is a condition when income or receipts overreach costs or outlays (expenditures). A surplus budget normally refers to the financial conditions of the governments. However, individuals choose to use the term ‘savings’ rather than ‘budget surplus.’ Surplus is a manifestation that the government is being effectually operated and regulated.
What is deficit Budget?
A budget deficit materializes when expenses overreach revenue and it is a symptom of financial health. The government normally uses this term to its spending instead of entities or individuals. Accrued government deficits form the national debt.
The above mentioned is the concept that is explained in detail about Balanced, Surplus and Deficit Budget for the class 12 students. To know more, stay tuned to BYJU’S.