What is the definition of a budget?

A budget is defined as a financial plan that outlines expected revenues and expenditures over a specific period. This definition captures the essence of budgeting, which involves forecasting financial activity to manage a company's resources effectively. A budget is crucial for setting financial targets, allocating resources, and guiding business decisions based on projected income and spending.

In the context of a business, having a well-structured budget enables organizations to plan for future operations, assess financial performance, and ensure that they have the necessary funds to meet their goals and obligations. This focus on future financial planning is what distinguishes a budget from other financial documents.

Other options, although related to finance, describe different concepts. For instance, a financial statement showing past performance reflects historical data rather than future plans. An inventory of assets pertains to the current resources a company owns, while an analysis of investment opportunities focuses on evaluating potential investments rather than managing budgetary constraints. Thus, the choice highlighting the forecast of revenues and expenditures stands out as the most accurate definition of what a budget is.