What is the definition of a budget variance?

The definition of a budget variance is indeed the difference between budgeted and actual figures. This concept is crucial in financial management, as it helps organizations assess their financial performance by comparing what they planned to spend or earn against what they actually incurred. Monitoring budget variances enables businesses to identify areas of over-expenditure or underperformance and take appropriate corrective actions. By analyzing these variances, management can understand the reasons behind financial discrepancies, which may involve assessing operational efficiencies or market conditions.

The other options describe distinct financial concepts but do not accurately define a budget variance. The total budget set for the year refers to the overarching financial plan itself rather than the analysis of its execution. An account of all financial transactions pertains to accounting records and not to the comparison between planned and actual figures. Lastly, the amount of profit made after expenses is a financial outcome related to profitability, rather than a specific measure of budget compliance.