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Answer the following questions below in 200 words minimum.

Statement: “The first relevant financial tool is the budget. A budget can be defined as a formal financial projection. The budget is used by an organization to express the organization’s activities for a specified period in quantitative terms, for example, dollars and hours. There two types of budgets which serve different purposes in an organization. The first is the fixed budget whereby the funds are distributed on the basis of a one estimate of cost. Importantly, it does not allow for adjustments over time. The second type of budget is the varied budgets.”

Question: If you are forming your very first budget, how do you know the inputs. Can you (through research or experience) give some steps in setting up the first budget for a small company?

 

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