Define the following:

1. Budget - A budget is an estimation of revenue and expenses over a specified future period
of time and is usually compiled and re-evaluated on a periodic basis. Budgets can be made for
a person, a family, a group of people, a business, a government, a country, a multinational
organization or just about anything else that makes and spends money.
2. Budget Committee - A budget committee is a group of people that creates and maintains fiscal
responsibility for an entity or organization. In a company, this committee usually consists of the
top management and the CFO.

3. Master Budget – The master budget is the aggregation of all lower-level budgets produced
by a company's various functional areas, and also includes budgeted financial statements, a
cash forecast, and a financing plan. The master budget is typically presented in either a
monthly or quarterly format, and usually covers a company's entire fiscal year.

4. Continuous Budget – Continuous budgeting is the process of continually adding one more
month to the end of a multi-period budget as each month goes by. This approach has the
advantage of having someone constantly attend to the budget model and revise budget
assumptions for the last incremental period of the budget.

5. Fixed Budget – A fixed budget, also called a static budget, is financial plan based on the
assumption of selling specific amounts of goods during a period. In other words, fixed budgets
are based on a set volume of sales or revenues. This is an easy way for management to plan out
expenses and operations when they assume that sales volume and total revenues will be a set
amount during a period.

6. Flexible Budget – A flexible budget, also called a variable budget, is financial plan of estimated
revenues and expenses based on the current actual amount of output. In other words, a flexible
budget uses the revenues and expenses produced in the current production as a baseline and
estimates how the revenues and expenses will change based on changes in the output.

7. Incremental Budget – An incremental budget is a budget prepared using a previous period's

budget or actual performance as a basis with incremental amounts added for the new budget
period.

8. Zero-based Budgeting – Zero-based budgeting (ZBB) is a method of budgeting in which

all expenses must be justified for each new period. The process of zero-based budgeting starts
from a "zero base," and every function within an organization is analyzed for its needs and costs.

9. Life-Cycle Budgeting – A life-cycle budget is an estimate of the total amount

of sales and profits to be garnered from a product over its estimated life span. This estimate
includes the costs to develop, market, and service a product
10. Activity-Based Budgeting – Activity-based budgeting (ABB) is a system that records,
researches, and analyzes activities that lead to costs for a company. Every activity in an
organization that incurs a cost is scrutinized for potential ways to create efficiencies.

11. Kaizen Budgeting – Kaizen is the practice of continually improving processes and
reducing costs. The concept tends to yield gradual improvements over a long period of time.

12. Governmental Budget – Government budgeting is the critical exercise of allocating revenues
and borrowed funds to attain the economic and social goals of the country. It also entails the
management of government expenditures in such a way that will create the most economic impact
from the production and delivery of goods and services while supporting a healthy fiscal position.

13. Budget Manual – A budget manual is a set of rules and instructions used by large
organizations to prepare their budgets and related reports. As organizations become larger and
more complex, it is no longer possible for just one person to prepare a budget.

14. Budget Planning Calendar – A budget planning calendar is a schedule of activities that must
be completed to create and develop a budget. Budget planning calendars are necessary for the
creation of complex budgets used by large organizations.

15. Distribution Instructions – Items usually included in a budget manual are a planning calendar and
distribution instructions for all budget schedules. Distribution instructions are important because, once
a schedule is prepared, other departments within the organization will use the schedule to prepare their
own budgets.

16. Budget Report – A budget report is a comparison of the actual results of a business to a pre -
established budget. This report is issued to anyone responsible for a line item in the income
statement, which usually means the department managers.