What is a budget?

A budget serves as a financial plan that outlines expected income and expenditures over a specific period. This tool is essential for individuals and organizations alike because it helps manage finances effectively by providing a clear view of how much money is available and how it will be allocated. By detailing anticipated revenues and expenses, a budget aids in strategic planning, ensuring that spending does not exceed income and that savings goals can be met. It plays a critical role in decision-making processes, helping both businesses and individuals to prepare for future financial scenarios and allocate resources efficiently.

In contrast, the other options address different financial concepts. A record of all business transactions pertains to bookkeeping rather than budgeting; an analysis of market conditions focuses on understanding the economic environment, which is separate from budgeting; and a strategy for reducing costs involves specific measures to lower expenses rather than an overall financial planning framework. Thus, the most accurate interpretation of what a budget is lies in its definition as a financial plan that encompasses expected income and expenditures.