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BUSINESS GLOSSARY 2022 SERIES
BUSINESS BUDGETING
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DEFINITION
BUDGETING IS A FINANCIAL ROAD MAP THAT BALANCE EXPENSES WITH INCOME.
A SPENING PLAN BASED ON THE INCOME & EXPENSES.
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BUDGETING METHODS
INCREMENTAL
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ACTIVITY BASED
VALUE PROPOSITION
ZERO BASED
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INCREMENTAL BUDGET
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THIS BUDGET METHOD REFER TO THE LAST YEAR'S ACTUAL AND THEN ADDS OR SUBSTRACT TO GET THE CURRENT YEAR'S BUDGET.
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IT IS AN ACTIVITY ORIENTED BUDGET, WHICH MEANS WHAT INPUT IS REQUIRED TO GET THE DESIRED OUT PUT IN FINANCIAL TERMS.
ACTIVITY BASED
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IT IS ALSO CALLED PRIORITY BASED BUDGETING. IT TRY TO JUSTIFY THE VALUE OF EVERY SINGLE EXPENDITURE.
VALUE PROPOSITION
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IT IS A METHOD OF DEVELOPING A BUDGET FROM SCRATCH EVERY TIME [STARTING FROM ZERO]. IT JUSTIFY EACH EXPENSES BEFORE ADDING INTO BUDGET.
ZERO BASED
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EFFECTIVE USE OF MONEY.
WHY BUDGETING IS IMPORTANT?
PROPER ROSOURCE ALLCATION.
MONITORING.
HELPS FUTURE PLANNING.
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