Cash budget
Solution
Sure, I can help you understand how to prepare a cash budget. Here are the steps:
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Identify the Period: Determine the period for which you want to prepare the cash budget. It could be for a month, quarter, or year.
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Estimate Cash Inflows: This includes all the cash that you expect to receive during the period. It could be from sales, interest, rent, or any other source of income. For sales, consider both cash sales and credit sales that will be collected within the period.
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Estimate Cash Outflows: This includes all the cash that you expect to pay out during the period. It could be for purchases, wages, rent, interest, taxes, or any other expenses. For purchases, consider both cash purchases and credit purchases that will be paid within the period.
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Determine the Opening Cash Balance: This is the cash balance at the beginning of the period. It is the closing cash balance of the previous period.
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Calculate the Closing Cash Balance: Add the opening cash balance and the total cash inflows, then subtract the total cash outflows. This gives you the closing cash balance.
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Consider the Minimum Cash Balance: If
Similar Questions
A cash budget is one in which: Group of answer choices credit sales and cash sales are recorded. credit sales and all expenses are recorded. cash sales and cash expenses are recorded. cash sales and all expenses are recorded.
Explain one purpose of preparing a cash budget. [2]
Riff, Incorporated is working on its cash budget for June. The budgeted beginning cash balance is $17,000. Budgeted cash receipts total $189,000 and budgeted cash disbursements total $188,000. The desired ending cash balance is $42,000. The excess (deficiency) of cash available over disbursements for June will be:Multiple Choice$1,000.$206,000.$18,000.$16,000.
The budget that sets out the expected future cash receipts and cash payments during the budget period is referred to as the:Group of answer choicescapital budget.cash budget.purchases budget.program budget.
All of these are ways in which the cash budget can assist decision making, except:Group of answer choicesidentifying suitable times for the purchase of non-current assets.assisting with the planning and use of borrowed funds.showing the assets and liabilities owned by the firm.identifying periods of expected cash shortages or surpluses.
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