Question

1. How are budgets used for a company or in government? What would your suggestions be to balance our economic budget?

2. After identifying suggestions for balancing the economic budget explain the importance of being able to identify various "variances" that may be identified? You may use any examples you want.

Answer 1

Budgets are used by the company and in government to keep expenses under control and also to identify how much financial resources have to be allocated to which activity. It helps in finding out how much funds have to be raised. It lists out the important activities to be carried out and thus helps in eliminating unnecessary expenses. In government also budget shows how much revenue in the form of taxes and other government activities has been received and how this revenue is being allocated for public service.

To balance the economic budget, expenditure has to be reduced and revenue has to be increased. Government should focus on the education and job requirements of the citizens. Educated persons can start their own business, start up and earn for themselves even if there is job deficiency. Job requirements should be looked into for those who are not literate. If everyone is earning , tax revenue will also increase. This will reduce the government expenditure on several employment programmes if the citizens become self sufficient. And also other developmental facilities can be looked into which will further improve industrial revenue and attract foreign investment also.

It is important to identify the variances so that the gap in activity rate from the actual budget could be filled and the progress could be brought on track. If the variances are not identified in time , the gap will go on increasing with time and the budget will fail.