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Budget

A budget is a quantified plan for a defined future period, linking intended activity with the resources, income and cash consequences expected. It supports planning, coordination, communication, control and performance evaluation, but those purposes can create tensions. Distinguish a target or authorised plan from a forecast of what is now expected to happen. Assumptions, responsibility, time horizon and the chosen costing basis should be clear.

Worked example

A sales budget plans 5,000 units at $20, producing revenue of $100,000. Production, staffing and cash budgets must be coordinated with that plan.

Common mistake

A budget is not automatically the best current forecast, and an adverse variance does not prove poor management if assumptions changed.

Where it appears in your exams

QualificationExamRelationshipPeriod
ACCA APM Direct September 2026–June 2027
ACCA MA Direct September 2026–June 2027
ACCA PM Direct September 2026–June 2027
FIA FMA Direct September 2026–June 2027