Going into each year, a company (or a person, or any other organization for that matter) will outline what it expects its spending to look like over the following 12 months. This projection is the annual budget.
The budget typically gets worked out based on educated guesses about what revenue will look at for the year. It also includes assumptions about what the goals are for the upcoming 12 months, taking into account things like whether a new international expansion is planned or whether a new product launch is scheduled.
Obviously, a lot can happen during a year, so annual budgets often get revised as the year moves on. In a corporate scenario, these reviews usually happen on a quarterly basis, as the company reacts to revenue realities and tries to take advantage of opportunities that arise unexpectedly. So, in that way, the annual budget becomes more of a guideline, or sketch, for the year ahead and is not considered set in stone.
Related or Semi-related Video
Finance: What are a 10K and 10Q?57 Views
finance a la shmoop what are 10K and 10Q filings well as the pros say 10Q
very much yeah you know we had to go there sorry well they're just filings a [Girl filing her fingernails]
different kind of filings legal filings papers or data
well the 10K is the annual report and the 10Q is the quarterly report their
note the Q in there yeah very clever naming their people well we have no idea
why the K is there like shouldn't it have been a 10A fling equals annual
anyway the filings contain the key elements that report to shareholders the [Man giving presentation to shareholders]
progress or lack thereof that the company has made in the period it's
reporting and these apply to public companies people privates don't
necessarily file... well the K the Q have to contain an updated income statement [Income statement, balance sheet and cash flow statement appear]
balance sheet and cash flow statement along with tons of notes on whatever
business metrics the company regularly reports the number of people made sick
by the lemonade the number a coal miner Barbies sold the number of Disney cruise
passengers infected with Legionnaires disease and so on and if you're the CEO [Person puking off the edge of a cruise ship]
or CFO of the company and you don't get your filings in on time well you'll be
doing a different kind of filing so yeah 10K, 10Q they're really important
don't ignore them...
Up Next
What is a Budget? A budget is a projected estimate of revenues and expenses within a fixed time period. It is intended to be a guide and reference...