Budget:A budget is an estimation of revenue and expenses over a specified future period of time and is usually compiled and re-evaluated on a periodic basis. Budgets can be made for a person, a group of people, a business, a government, or just about anything else that makes and spends money. Types of Budgets:1. Cash budget:Cash budget contains estimated receipts and payments of cash over the specified future period. It serves as an effective device for control and co­ordination of activities that involves receipt and payment of cash. It helps to detect possible shortage or excess of cash in business. 2. Master budget:It is a summary budget incorporating all the functional budgets, which is finally approved, adopted, and applied. Thus, the master budget is prepared by consolidating departmental or functional budgets. It is a summarised budget incorporating all functional budgets. It projects a comprehensive picture of the proposed activities and anticipated results during the budget period. It must be approved by the top management of the enterprise. Though practices differ, a master budget generally includes, sales, production, costs-materials, labour, factory overhead, profit& loss account, balance sheet, appropriation of profit, and major financial ratios. 3. Flexible budget:A flexible budget is a budget that adjusts or flexes with changes in volume or activity. The flexible budget is more sophisticated and useful than a static budget. The static budget amounts do not change. They remain unchanged from the amounts established at the time that the static budget was prepared and approved. 4. Sales budget:A sales budget is an estimate of the expected total sales revenue and selling expenses of the firm. It is known as a nerve center or backbone of the enterprise. It is the starting point on which other budgets are also based. It is forecasting sales for the period both in quantity and value. It shows what product will be sold, in what quantities, and at what prices. Therefore, the budget which commonly takes the form of budgeted profit and loss account and balance sheet is the master budget.