Which of the following best describes a budget?

Which of the following best describes a budget?

• A. A detailed report on past expenditures
• B. A plan that focuses on savings only
• C. A financial plan outlining income and expenses
• D. A ledger of all transactions

Answer: (C)

A budget is best described as a financial plan outlining income and expenses. It serves as a roadmap for managing finances by detailing how much money is expected to be received (income) and how much will be spent (expenses) over a certain period. This comprehensive overview allows individuals or organizations to track their financial activities, make informed decisions about spending and saving, and ensure that financial goals are met. In contrast, detailing past expenditures is a different function typically associated with financial reports, which do not encapsulate future planning. Focusing solely on savings ignores the crucial aspect of income and expenses, as a budget must consider both in order to be effective. Lastly, while a ledger tracks all transactions, it does not provide the predictive and planning features of a budget; it is more about recording what has already happened rather than planning for the future. Thus, the correct answer effectively captures the essence of what a budget entails.

A budget is best described as a financial plan outlining income and expenses. It serves as a roadmap for managing finances by detailing how much money is expected to be received (income) and how much will be spent (expenses) over a certain period. This comprehensive overview allows individuals or organizations to track their financial activities, make informed decisions about spending and saving, and ensure that financial goals are met.

In contrast, detailing past expenditures is a different function typically associated with financial reports, which do not encapsulate future planning. Focusing solely on savings ignores the crucial aspect of income and expenses, as a budget must consider both in order to be effective. Lastly, while a ledger tracks all transactions, it does not provide the predictive and planning features of a budget; it is more about recording what has already happened rather than planning for the future. Thus, the correct answer effectively captures the essence of what a budget entails.