A budget is a financial statement, prepared and approved before a financial or accounting time period, of the expected and planned transactions of revenue and expenditure in the monetary and quantitative terms, reflecting the business policy of the Hotel/company. It can also be defined as-
· A guideline to the managers to achieve the business targets.
· A tool to the audit department /directors to measure the business success or shortfall.
· A legal statement for the investors/ share holders, of the future business plan.
· A strategic business plan for the future, after considering past activities.
Some of the basic elements of the budget are:
· It is a business specific, depending of actual situation.
· It is a future plan.[not actual]
· It is time specific. It should be for a specific period, especially financial period.
· Both the revenue and expenditure should be counted.
· Plans should include all the resources and the operations.
· It should be expressed in financial accountable terms.
· As it is a future plan, the actual result may vary from the planed one.
So we can say “a budget is a comprehensive and coordinated statement expressed in monetary terms,reflecting the policy of a hotel and determining its operation in respect of a particular trading period”. E.G.- The financial budget of the hotel abc for the [fiscal] year 1999-2000; The sales budget of the hotel star for the year 1999-2000.