The implementation of a budget is the responsibility of the budget director. The success of the entire exercise of budgeting depends on two important factors.

First, proper and clear communication to all key people involved in the implementation of the budget. These stakeholders should have a clear understanding of what is expected of them and how to achieve the goals.

Second, cooperation and encouragement from the top management in achieving the budget targets. The company’s leading managers and executives should be willing to reward people who meet budget goals.

Ideally, top management and staff working at the lower levels of management should collaborate to prepare and implement the budget successfully.


Shown below are the budgeted statements of cash receipts and cash disbursements for the XYZ Company for the year ended 30 June 20×1.

Total First Quarter Second Quarter Third Quarter Fourth Quarter
Opening Cash Balance 85,000 20,000 15,000 30,000 20,000
Cash Receipts 60,000 15,000 6,000 26,000 13,000
Total Cash Available 145,000 35,000 21,000 56,000 33,000
Cash Disbursements:
Inventory 25,000 5,000 6,000 9,000 5,000
Asset Purchase 60,000 30,000 15,000 5,000 10,000
Operating Expenses 15,000 5,000 5,000 2,500 2,500
Total 100,000 40,000 26,000 16,500 17,500
Minimum Cash Balance Required 20,000 5,000 5,000 5,000 5,000
Total Cash Needed 120,000 45,000 31,000 21,500 22,500
Excess of Cash Available Over Cash Disbursements 25,000 (10,000) (10,000) 34,500 10,500


Budgeted Balance Sheet, 30 June 20×1
Current Assets
Cash 25,000
Accounts Receivable 10,000
Inventory 20,000
Fixed Assets
Land 30,000
Total 85,000
Liabilities and Owner’s Equity
Current Liabilities
Accounts Payable 20,000
Accrued Expenses 5,000
Owner’s Equity 40,000
Reserves and Surplus 20,000

Frequently Asked Questions

What is a budget?

A budget is the total estimated costs for an organization to achieve its objectives, given planned expenditures on products or services, within the set time frame. A good budget includes specific information about revenue and costs, as well as financing requirements.

How do we implement the budget?

To implement a budget, we must first allocate resources to meet our targets. For each resource, we make an estimate of how much is required for the given period. We also indicate whether there will be any carry-over balances from previous periods. Carry-over balances are amounts that were not used in the previous periods and can be carried over into the current period to help meet requirements. Next, we determine how our spending will be financed. If financing is not available, then it should be identified whether there are any funds that could be used to finance overspending in this area. After allocating resources, we can identify whether there are negative or positive Cash Flows for each of our proposed plans.

How can we determine if a budget has been implemented?

In order to determine whether a budget has been implemented, we need to know what the original targets were and compare them with real figures. Once we have these two sets of numbers, it is relatively easy to identify where the plan was met and where it was not.

Who implements the budget?

The budget director is responsible for the implementation of the budget. This person will have to ensure that all stakeholders are kept informed and encourage them to meet their targets in order to achieve overall success.

Whom should we communicate with in order to implement a budget?

There are many people who need to be communicated with in order to implement a budget. These include: - Top management (for encouragement and cooperation) - The board of directors (to report on progress and discuss any difficulties we might encounter) - Senior managers (who will be responsible for the day to day implementation of the budget – they can also provide valuable feedback) - Staff at lower levels, such as supervisors and department heads (who must be told how the budget affects them, what they are expected to do, and how they can meet their targets)

True is a Certified Educator in Personal Finance (CEPF®), author of The Handy Financial Ratios Guide, a member of the Society for Advancing Business Editing and Writing, contributes to his financial education site, Finance Strategists, and has spoken to various financial communities such as the CFA Institute, as well as university students like his Alma mater, Biola University, where he received a bachelor of science in business and data analytics.

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