Types of Budgets

There are different types of budgets for different purposes. Some of the main types of budgets include:

1. Operating budgets reflect day-to-day expenses and depreciation (the current portion of capitalized expenses). They typically cover a one-year period. 
2. Capital budgets outline planned outlays for investments in plant, equipment, and product development. Capital budgets may cover periods of three, five, or ten years. 
3. Cash budgets plot the expected cash balances the organization will experience during the forecast period, based on information provided in operating and capital budgets. Cash budgets are prepared by the finance department and are critical to ensuring that the company has sufficient liquidity (cash and credit) available to meet expected cash disbursements.