There are 10,000 shares of $20 par value cumulative 7 percent preferred stock outstanding, and 90,000 shares of common stock out
standing. Last year, the preferred stock did not receive its dividend because of a loss. This year, dividends of $50,000 are distributed to shareholders.
A budget is a financial plan used for the estimation of revenue and expenditures of an individual, organization or government for a specified period of time, often one year. Budgets are usually compiled, analyzed and re-evaluated on periodic basis. The benefits of having a budget is that it aids in setting goals, earmarking revenues and resources, measuring outcomes and planning against contingencies.
The budgeting method described in the question is called objective and task. It is typically used by various organizations or companies due to the fact that, it's tied directly to the strategy and tactics of a company on an annual basis. Also, it is used to set a budget for marketing efforts while anticipating on informations about the company.
