BUDGETING is the quantified financial plan for a forthcoming accounting period. Its derived from a French word ‘ BOUGETTE’ . BUDGETING is the act of balancing ones cash flow with the expenditure. Its an approach of managing finance and its been compiled annually. It is also an estimate of income, resources and expenditure for a certain period of time..

REVENUE is an income which is being is been generated by the government

EXPENDITURE is an expenses i.e money paid out or an amount spent

TYPES OF BUDGET

1.    SURPLUS BUDGET; when a revenue is more than the expenditure i.e when the revenue planned by the government is more than their revenue.

2.    DEFICIT BUDGET: when the planned revenue is not up to the government revenue i.e when the expenditure is more than the revenue. In case of deficit whereby the government doesn’t have enough  money, government can raise fund through;

A.      Rasing loans from the banks and non bank and as well as the public through the sales of treasury bills, treasury certification

B.      Raising loans from international monetary institution e.g IMF, ABD,

C.      Raising loans from international monetary commercial creditors e.g London club, paris club of creditors

3.    BALANCED BUDGET: when a revenue is equal to the expenditure.

NEEDS OR NECESSITY OF BUDGETTING

1.     To achieve quantitative goals

2.     To control resources

3.     It support/ back up/ assist political decision

4.     Its a form of authorization in government

5.     To fight inflation or recession

6.     Ensures values for money

7.     Serves as a check against financial irresponsibilities

8.     It monitors how the govt spends money

9.     Motivate managers to be proactive

10.                         To evaluate the performance of a manager

ELEMENT/ COMPONENT/ PARTS/ CONSTITUENTS/ INGREDIENT/ FACTORS OF A BUDGET

1.       Projected expenses: amount of money which is expected to spend in the coming fiscal year  which is usually broken down into categories you expected to spend it.

2.       Projected income: amount of  money expected to make for a coming year broken down by sources

3.       Adjustment to reflects realities as the year goes on. It happens where the budget is new where there is need to adjust the budgeted amount.

4.       Sources of finance: where to get funds

                                                      STAGES OF BUDGETING SYSTEM

1.       BUDGET CONCEPTION: 

2.       Budget preparation: a stage where all dept in the organization submits their revenues and expenditure proposal for the forthcoming year. Adjustment can also be made in this stage

3.       Budget approval: a stage where the budget is signed in order to become a legal document.

4.       Budget execution: a stage where funds are being disbursed for projects and implementation of policies.

5.       Budget monitoring & evaluation: a stage to make sure that the budget allocated for a particular purpose is being used for that purpose, and not for other purpose.