Correct Answer: Both statements are correct.

Solution : The correct answer is (a) Both statements are correct.

Statement 1 is correct. A budget is indeed a financial plan that outlines an organization's expected revenues and expenditures over a specific period. It serves as a tool for managing and controlling financial resources.

Statement 2 is also correct. One of the primary purposes of budgeting is to facilitate resource allocation. By creating a budget, organizations can prioritize and allocate funds to different activities and projects based on their strategic goals and priorities.

Therefore, both statements are correct.