Cash budget 1.0 / 5 based on 1 rating ? AccountingCash budget UniversityAll boards Created by: josief95Created on: 13-12-15 14:42 What is a budget? a financial plan of operation or entity for a period of time usually one year. 1 of 14 Budget Committee: is the co-ordinating body in the preparation and administration of budgets 2 of 14 MASTER BUDGET includes: Forecast Income Statement; Forecast SOFP; Cash flow forecast 3 of 14 Approaches to generating and managing budgets: Top down & Bottom up (Departmental budgeting) 4 of 14 Top down / Imposed budgeting approach to managing budgets: involves senior management laying down the budget with little or no employee involvement 5 of 14 Bottom up / participative budgeting approach to managing budgets: involves the participation of the work force who then submits the budgets to their superiors 6 of 14 Headings along top horizontal axis of a CASH BUDGET Months 7 of 14 Headings down the vertical axis of a CASH BUDGET Titles of expenses 8 of 14 Inventories budget includes (down vertical axis): Opening balance; Purchases : Inventories used: Closing balance 9 of 14 Accounting Rate of Return (ARR) = Av. annual operating profit / av. investment to earn that profit x100 10 of 14 Two subheadings (Vertical axis) Reciepts; Payments 11 of 14 Horizontal axis Months; total 12 of 14 Under Net (At bottom of cash budget) Cash balance B/f = Brought forward; Cash balance c/f = Closing figure 13 of 14 Advice regarding expected cash flows: Increase overdraft facility; spread costs of van; increase sales margin; source cheaper supply 14 of 14
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