What defines a balanced budget?

What defines a balanced budget?

• A. When total assets exceed total liabilities
• B. When total expenditures exceed total revenues
• C. When total revenues equal total expenditures
• D. When budgeted figures are perfectly aligned with actuals

Answer: (C)

A balanced budget is defined as a situation where total revenues equal total expenditures. This means that the government or organization is not spending more than it earns in revenue, ensuring fiscal responsibility and sustainability. Maintaining a balanced budget is crucial for effective financial planning as it prevents the accumulation of debt and encourages the allocation of resources in a way that aligns with projected income. The other choices do not accurately capture the essence of a balanced budget. For instance, total assets exceeding total liabilities pertains to the overall financial health of an entity rather than its budgeting process. Similarly, having total expenditures exceed total revenues indicates a budget deficit, which is the opposite of a balanced budget. Lastly, alignment of budgeted figures with actuals is related to budget accuracy and performance monitoring, but it does not inherently define a balanced budget. The key focus remains on the equality of revenues and expenditures to achieve fiscal equilibrium.

A balanced budget is defined as a situation where total revenues equal total expenditures. This means that the government or organization is not spending more than it earns in revenue, ensuring fiscal responsibility and sustainability. Maintaining a balanced budget is crucial for effective financial planning as it prevents the accumulation of debt and encourages the allocation of resources in a way that aligns with projected income.

The other choices do not accurately capture the essence of a balanced budget. For instance, total assets exceeding total liabilities pertains to the overall financial health of an entity rather than its budgeting process. Similarly, having total expenditures exceed total revenues indicates a budget deficit, which is the opposite of a balanced budget. Lastly, alignment of budgeted figures with actuals is related to budget accuracy and performance monitoring, but it does not inherently define a balanced budget. The key focus remains on the equality of revenues and expenditures to achieve fiscal equilibrium.