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The Annual Budget: Financing Your Plans

Once management has decided on a business plan that sets company goals for the next year, they need to determine (a) if they can afford to achieve those goals, (b) if the plan will make a profit for the company, and (c) if the plan will meet the goals set by management. Those questions are best answered by converting the operating plan’s goals and actions into dollars and cents, then breaking down the plans into chunks that can be evaluated and managed during daily operations. That’s the purpose of the annual budget. The annual budget is the estim...


Subject Overview
A critical accounting tool for planning and forecasting is the budget. Budgets help you carefully plan how you will spend your resources so you can control your costs. In essence, it provides a fiscal strategy for achieving your goals. This section of the tutorial covers how to prepare and manage a budget.

Lesson Introduction
Thoughtful and well-constructed budgets enable you and your team to meet, and perhaps exceed, your goals. See how to plan and establish a sound budget.