A budget is a financial plan expressed in quantitative terms for a defined future period. It translates an organization’s goals into expected revenues, expenses, cash flows, and capital expenditures, using the same structure as financial statements. Once the period ends, comparing actual results to the budget (variance analysis) reveals where performance differed from expectations and why. Budgets serve four functions: planning (forcing decisions about the future), coordination (aligning departments around shared assumptions), control (flagging deviations from the plan), and performance evaluation (measuring managerial effectiveness). The budget is the primary tool that connects accounting’s record-keeping function to management’s decision-making function.