Types of budget: operating, cash, fixed and master budgets

This week’s topics

Types of budget: operating, cash, fixed and master budgets

1. Starting point: from a personal budget to a business budget; fixed costs
2. Operating budget
3. Cash budget
4. Fixed budget
5. Master budget

What you will be able to do

• 4.1 Differentiate between different types of budgets.

Activity

Start with this week’s 2 videos, then discuss how they apply to this week’s topic and note one example from a real business.

Study materials

Videos

• How can financial planning support independent living? · Oak National Academy, Key Stage 4 (GCSE level) · for registered students
• The importance of fixed costs · YouTube · Marginal Revolution University · 8 min · for registered students

Further resources

• Contemporary Mathematics, ch. 6.5: Making a personal budget · PDF · OpenStax (2023); pp. 589–600 · for registered students
• Principles of Accounting Vol. 2, ch. 2.2: Fixed, variable and mixed cost behaviour · PDF · OpenStax (2019), section 2.2 on fixed, variable, mixed and step costs; pp. 76–92 · for registered students
• Principles of Accounting Vol. 2, ch. 7.1–7.2: How managers use budgets; operating budgets · PDF · OpenStax (2019), sections 7.1–7.2 on the purpose of budgets and building the master budget; pp. 316–328 · for registered students
• Principles of Accounting Vol. 2, ch. 7.4–7.5: Flexible budgets and evaluating goals · PDF · OpenStax (2019), sections 7.4–7.5 comparing fixed (static) and flexible budgets for control; pp. 336–343 · for registered students
• Empirical Budgeting Research in Accounting Journals: Review, Critique, and Research Agenda · Open-access article · Batt (2025), Accounting, Finance & Governance Review. Up-to-date review of budgeting for planning and control, budgetary slack and Beyond Budgeting. · for registered students