Budgetary Slack


DEFINITION of 'Budgetary Slack'

The intentional allowance for extra expenditures in a future cash flow. Budgetary slack can take one of two forms: It can either underestimate the amount of income or revenue that will come in over a given amount of time, or overestimate the expenses that are to be paid out over the same time period.

BREAKING DOWN 'Budgetary Slack'

Budgetary slack is generally frowned upon by most accountants. This strategy effectively prevents budgets from working properly. It can even be unethical in some cases, such as when companies intentionally distort these figures in order to achieve certain accounting objectives.

  1. Revenue

    The amount of money that a company actually receives during a ...
  2. Expense Ratio

    A measure of what it costs an investment company to operate a ...
  3. Expense

    1. The economic costs that a business incurs through its operations ...
  4. Shortfall

    The amount by which a financial obligation or liability exceeds ...
  5. Budget

    An estimation of the revenue and expenses over a specified future ...
  6. Encumbrance

    A claim against a property by a party that is not the owner. ...
Related Articles
  1. Entrepreneurship

    Six Steps To A Better Business Budget

    This easy but essential process helps owners ensure that their businesses can stay afloat.
  2. Budgeting

    5 Ways To Stretch Your Retirement Budget

    Living comfortably can be easy if you follow a simple plan.
  3. Options & Futures

    Bloated Budget? How To Trim The Fat

    Blood, sweat and tears should belong in the gym, but your money deserves some training time too.
  4. Budgeting

    6 Months To A Better Budget

    Can you have perfect abs in just six minutes a day? Maybe not, but you can have a rock-solid budget in six months.
  5. Budgeting

    The Beauty Of Budgeting

    Make it to the end of the month, before you run out of money.
  6. Budgeting

    Are You Living Too Close To The Edge?

    If a missed paycheck will make your finances cave in, you must learn how to make proper supports.
  7. Budgeting

    Budgeting While You're In College

    Test your money management skills as you work your way through university.
  8. Entrepreneurship

    Run Your Finances Like A Business

    Think of yourself as your own little company. To make it run smoothly, you need to take a look at your books.
  9. Budgeting

    How Budgeting Works For Companies

    Learn how to break down and understand a corporate budget.
  10. Economics

    Calculating Long-Term Debt to Total Assets Ratio

    A company’s long-term debt to total assets ratio shows the percentage of its assets that are financed with long-term debt.
  1. How do I read and analyze an income statement?

    The income statement, also known as the profit and loss (P&L) statement, is the financial statement that depicts the ... Read Full Answer >>
  2. Do dividends affect working capital?

    Regardless of whether cash dividends are paid or accrued, a company's working capital is reduced. When cash dividends are ... Read Full Answer >>
  3. Do prepayments provide working capital?

    Prepayments, or prepaid expenses, are typically included in the current assets on a company's balance sheet, as they represent ... Read Full Answer >>
  4. How can companies use the cash flow statement to mislead investors?

    Cash flow is a means for most investors to examine the actual economics of a business they might invest in, especially from ... Read Full Answer >>
  5. Does working capital include salaries?

    A company accrues unpaid salaries on its balance sheet as part of accounts payable, which is a current liability account, ... Read Full Answer >>
  6. What is a profit and loss (P&L) statement and why do companies publish them?

    A profit and loss (P&L) statement, or balance sheet, is essentially a snapshot of a company's financial activity for ... Read Full Answer >>

You May Also Like

Hot Definitions
  1. Real Estate Investment Trust - REIT

    A REIT is a type of security that invests in real estate through property or mortgages and often trades on major exchanges ...
  2. Section 1231 Property

    A tax term relating to depreciable business property that has been held for over a year. Section 1231 property includes buildings, ...
  3. Term Deposit

    A deposit held at a financial institution that has a fixed term, and guarantees return of principal.
  4. Zero-Sum Game

    A situation in which one person’s gain is equivalent to another’s loss, so that the net change in wealth or benefit is zero. ...
  5. Capitalization Rate

    The rate of return on a real estate investment property based on the income that the property is expected to generate.
  6. Gross Profit

    A company's total revenue (equivalent to total sales) minus the cost of goods sold. Gross profit is the profit a company ...
Trading Center
You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!