Budget period is a period relating to which budget is prepared. A budget period may relate to a short term period or long term period. Sometimes these period may relate even to a month for monitoring and control of budget. It is always desirable to have short term budget period excepting those functions which may prolong for longer period for example, research and development. The duration of the budget period depend on the type of business, the length of manufacturing cycle, the ease or difficulty of forecasting future market condition and so on. The budget period may be accordingly short term budget period or long term budget period.
Short term budget period may cover a period three month to one year. Long term budget period may be taken to mean a budget prepared for period of more than one year.