The Definition of Budgeting, Its Types and Methods Essay

A budget cycle

A budget cycle can be defined as a duration in which a budget will last. In other words, it is a time taken to exhaust the budgeted resources of a budget. A budget cycle can also refer to the time span between one budget and the next one.

Budget cycles normally differ from person to person and organization to organization. This depends on a number of reasons such as resources, policies, and business lifespan among other reasons.

Types of budgeting

Budgets normally differ in a number of ways. For instance, personal budgets are different from business budgets. Therefore, the first type of budgeting is a personal budget, which presents a plan on how the funds of the individual will be used within a certain period (Stringfellow 1).

Business budgeting is diversified to plan for specific funds that are allocated to different sectors of the business (Stringfellow 1). In that case, there are sales budgets, revenue budgets, production budgets, expenditure budgets, and cash budgets. Another type is a government budget, it is a budget according to which government plans the resources of the nation.

Types of funds

Businesses have different sources of getting their funds. First, they can get funds from the profits generated by the business. In this case, the source of funding will be the business itself.

Second, they can get funds from reserves which are also known as the shareholders equity. Reserves entail the money invested into the company in the form of shares by external parties (shareholders) to the businesses.

Government Methods of Financing

The government has different ways of financing its budget. The most common ones include trust funds in which the government disposes some of its current assets that are not in use hence creating a trust fund for them.

Another method of financing the government is providing the user fees paid by legal entities and individuals to get the authority of running specific services. Taxes are paid to the government, and donations from aid bodies present another way through which governments get finances.

Strategy and management of budgeting

The process of budgeting is of a great concern, as well as other business processes. taking into consideration this fact, it has to be strategically planned and managed in order to achieve its objectives. The strategy put in place should be able to ensure that the budget balances properly and that there is no deficit or surplus.

This is because a budget forms a critical point during decision making for the business enterprise. One of the strategies put in place is the forecasting, whereby the business enterprises prepare forecast budgets prior to the actual budgets. The other strategy entails making sure that the budget is followed up to the last dot.

Types of Taxes

There are different types of taxes that are paid by individuals and businesses to the government. It is due to the fact that they are imposed on different items such as goods, payrolls, property, and income. Under the income category, there are income taxes, corporate taxes, and capital gains taxes.

As for the property, there are property taxes, expatriation taxes, inheritance taxes, net worth taxes and transfer taxes. Based on goods and services there are value added tax (V.A.T), tariffs, excises, and sales taxes. Other types of taxes include license fees and poll taxes. The list of taxes is endless, since almost everything is under taxation.

Works Cited

Stringfellow, Angela. What are the Different Types of Budgeting? 1999. Web. <https://www.sapling.com/4869424/what-different-types-budgeting>

This essay on The Definition of Budgeting, Its Types and Methods was written and submitted by user Frankl1nR1chards to help you with your own studies. You are free to use it for research and reference purposes in order to write your own paper; however, you must cite it accordingly.

You can donate your paper here.

More Economics Paper Examples