![]() The forecast is updated at regular intervals, perhaps monthly or quarterly. There is usually no forecast for financial position, though cash flows may be forecasted. The forecast is typically limited to major revenue and expense line items. The budget to actual comparison can trigger changes in performance-based compensation paid to employees.Ī forecast is an estimate of what will actually be achieved. Management takes remedial steps to bring actual results back into line with the budget. The budget is compared to actual results to determine variances from expected performance. The budget may only be updated once a year, depending on how frequently senior management wants to revise information. ![]() The budget is a detailed representation of the future results, financial position, and cash flows that management wants the business to achieve during a certain period of time. A budget is a quantified expectation for what a business wants to achieve.
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