Question

State if you agree or disagree with this statement and why? Response should be more than a “book report”, and display proof of critical thinking.

In public budgeting the two approaches are appropriation and budget. Appropriations are simpler to prepare and understand. It consists of line items and then the cost is associated with every item involved in appropriation. An appropriation must meet the statutory requirements of Illinois. The preparation of Appropriation requires minimum number of resources. On the other hand a Budget covers each and every activity along with cost associated to every activity. It is more in detail, required a lot of resources in preparation and provides more transparency as compared to Appropriation. Budget and appropriation represent the maximum amount of expenditures that entities are authorized to spend.

Balance Budget: it’s a situation in financial plan or in budgeting practice where total revenues are equal or greater than total expenses. A budget can be considered balance or in equilibrium when a budget has no budget deficit, but possibly have a budget surplus. It’s kind of demand equal capacity assignment that needs to be in equilibrium. The revenue from each budget can help a company to have more fund balance that can help the authorities to use it later in term of lack in budget for future.

Answer 1

Appropriation and Budget are two approaches in public budgeting. Let’s understand appropriation, budget and balance budget one by one.

Appropriation refers to allocation of resources of a firm between various activities of the firm. We know that a firm involve in various types of activities and each & every activities require some funds for being performed.

A firm may hold some funds but these funds can not work untill these funds are appropriated amongst the activities of this firm. So we can say that when available resources are allocated amongst the various activities of the firm then this process of allocation of the funds will be known as appropriation.

Now let’s see what is budget?

Budget is refers to the estimation about the revenues and expenditures for a future time. So budget means making a possible estimation about the future possible receipts of the funds and possible future expenditures. Hence we can say that budget refers to the format which includes all possible receipts and possible expenditures for a future time period.

Balance budget refers to the condition where all possible revenues are exactly equal to the possible expenditure. In other words we can say when both receipts and expenditures are equals then budget will be known as balance budget.

Surplus budget refers to the situation when receipts are more than expenditures. Hence a budget will be known as surplus budget if receipts are in excess of associated expenditures. Deficit budget is just opposite conditions, it means when future possible expenditures are more than revenues then that budget will be known as deficit budget. In other words we can say that when a firm has no sufficient funds to meet its associated expenditures then this budget will be known as deficit budget.