Difference between budgeting and forecasting

Question

Accepted Answer

Budgeting involves creating a financial plan for a specific period, while forecasting predicts future financial outcomes.

Budgeting is a detailed plan that outlines expected income and expenses for a specific period, usually a year.
Forecasting is an estimate of future financial outcomes based on historical data and trends.
Budgeting focuses on setting financial targets and allocating resources accordingly.
Forecasting helps in predicting future financial performance and making informed decisions.
Budgeting is more specific and detailed, while forecasting is more general and based on assumptions.
Budgeting is used for short-term planning, while forecasting is used for long-term planning.
Example: Budgeting involves creating a monthly budget for a company's expenses, while forecasting predicts the company's revenue for the next year.

Accepted Answer

Budgeting is a expected revenue which business wants to achieve in future period and forecasting is estimate amount of revenue or income wants to achieve for future period .

Difference between budgeting and forecasting

Top HCLTech Financial Analyst interview questions & answers

Popular interview questions of Financial Analyst

Top HR questions asked in HCLTech Financial Analyst