Which type of budget is best? Check Answer at BYJU’S (2024)

FAQs

Which type of budget is best? Check Answer at BYJU’S? ›

Deficit budgets are better suited for developing economies. Whenever there is a recession, a deficit budget will help in generating employment and boost the economy. If there is a surplus budget then it could indicate that the country is economically highly developed.

There are three types of government budgets: balanced, surplus, and deficit. A balanced budget ensures economic stability and prevents imprudent expenditures, but it is not suitable for times of economic depression or deflation.

A flexible budget is always a successful one. To execute the plans and achieve the goals, a budget must be flexible. A flexible budget is always a practical one because it can modify its plans according to the demand.

A balanced budget (particularly that of a government) is a budget in which revenues are equal to expenditures. Thus, neither a budget deficit nor a budget surplus exists (the accounts "balance"). More generally, it is a budget that has no budget deficit, but could possibly have a budget surplus.

Balanced Budget: Income and expenses are equal, resulting in no deficit or surplus. Deficit Budget: Planned expenditures exceed projected revenues, resulting in a budget shortfall. Surplus Budget: Projected revenues exceed planned expenditures, resulting in a budget surplus.

Incremental budgeting

It is the most common type of budget because it is simple and easy to understand. Incremental budgeting is appropriate to use if the primary cost drivers do not change from year to year.

Start by determining your take-home (net) income, then take a pulse on your current spending. Finally, apply the 50/30/20 budget principles: 50% toward needs, 30% toward wants and 20% toward savings and debt repayment.

By tracking expenses and following a plan, a budget makes it easier to pay bills on time, build an emergency fund, and save for major expenses such as a car or home. Overall, a budget puts a person on stronger financial footing for both the day-to-day and the long term.

The 50/30/20 approach can be a helpful way to get started with budgeting. It's a simple rule of thumb that suggests you put up to 50% of your after-tax income toward things you need, 30% toward things you want, and 20% toward savings.

Is balanced budget good or bad? ›

Proponents say balancing the budget protects future generations as well as social programs like Social Security. Many mainstream economists don't believe the U.S. government must balance its budget because any drastic action could derail the economy.

Budget Balance - Key takeaways

A negative budget balance is called a deficit and a positive budget balance is called a surplus. The budget balance equation is S = T - G - TR, where S = Government Savings (Budget Balance), T = Tax Revenue, G = Government Purchases of Goods and Services, and TR = Transfer Payments.

The 7 different types of budgeting used by companies are strategic plan budget, cash budget, master budget, labor budget, capital budget, financial budget, operating budget.

There are three types of budgets: balanced, surplus, and deficit, based on how accurate these projections are. The three distinct budget kinds are discussed below. A balanced budget is one in which the anticipated revenue for a particular fiscal year is equal to the estimated spending for that year.

A master budget is the central financial planning document that includes how a company will spend and how much it expects to earn in a fiscal year. A master budget contains budgets of departments within the organization and projections that allow for management to plan for the upcoming year.

The 7 different types of budgeting used by companies are strategic plan budget, cash budget, master budget, labor budget, capital budget, financial budget, operating budget.

Operating and capital budgets are the two budgets that nurse managers construct and monitor most often; therefore, these are discussed in more detail throughout this book.