Purpose of a budget

• How is a budget used as a purpose for forecasting?

  Prepare projected profits using business sales forecasts

  Provide businesses with a forward looking perspective on their sales
• How is a budget used as a purpose for communication?

  For owners to communicate their objectives of the business in a financial plan

  Enables informed decision making to be more efficient
• How is a budget used as a purpose for motivation?

  Motivate staff to be more careful with the finances

  Staff are more likely to be cautious when spending company money